Bharatiya Nyaya Sanhita | Disproportionate Culpability and Clean Chit to Co-Accused Justify Bail Denial : Bombay HC

The Bombay High Court's Nagpur Bench has rejected a bail application filed by a bank loan manager accused of misappropriating over Rs. 2.5 crore through fraudulent loan sanctions. The Court held that the applicant's active involvement in unauthorized transactions, as evidenced by preliminary investigations, precluded bail under Sections 316(2), 316(5), 318(4), and 3(5) of the Bharatiya Nyaya Sanhita (BNS), 2023. The judgment underscores the stringent scrutiny applied to financial offences involving public trust and systemic fraud.

Background & Facts

The Dispute

The applicant, Ganesh s/o Purushottam Patre, was employed as a Loan Manager at the Bank of India, Itwari Branch, Nagpur. He was accused of colluding with Anupam Kumar (Branch Manager) and Pratik Itankar (a daily-wage worker) to misappropriate funds by sanctioning loans without proper documentation and transferring the amounts into personal accounts. The fraud came to light on 15.04.2025, when a staff member observed irregularities involving unauthorized Temporary Overdrafts (ToDs) granted by the applicant, who was officially on leave at the time.

Key Facts

• Crime No. 739/2025 was registered at Tahsil Police Station, Nagpur, for offences under Sections 316(2), 316(5), 318(4), and 3(5) of the Bharatiya Nyaya Sanhita (BNS), 2023.
• The applicant and Anupam Kumar allegedly created forged loan accounts, sanctioned loans without supporting documents, and misappropriated Rs. 2.52 crores.
• Rs. 25 lakhs was transferred into the applicant's Axis Bank account, which was later transferred to Anupam Kumar's account.
• Rs. 78 lakhs was transferred into Pratik Itankar's Kotak Mahindra Bank account, but the entire amount was withdrawn by Anupam Kumar.
• A preliminary investigation by the Assistant General Manager of the Bank revealed that:
  • Loan accounts were opened without documentation, and limits were increased without proper authorization.
  • Funds from loan accounts were parked in savings accounts and routed to the accounts of Anupam Kumar, the applicant, and Pratik Itankar.
  • Counterfeit stamps and cheque books belonging to trading companies were found in Anupam Kumar's desk.
  • The applicant was observed granting unauthorized ToDs on 15.04.2025, despite being on leave.

Procedural History

• FIR Registered: Crime No. 739/2025 on an unspecified date in 2025.
• Preliminary Investigation: Conducted by the Assistant General Manager, Bank of India, culminating in a report dated 15.04.2025 (exact date inferred from context).
• Statements Recorded: Statements of bank staff, including Ganesh Gaikwad and Rachana Hiwase, alleging misappropriation and illegal activities by the applicant.
• Bail Application: Filed before the Bombay High Court (Criminal Application No. 796/2026) on 09.07.2026.

The Parties' Positions

For the Applicant

• The applicant contended that he was innocent and merely a scapegoat, as his account was used by Anupam Kumar without his knowledge.
• It was argued that Pratik Itankar, against whom similar allegations were made, was given a clean chit by the Investigating Officer, and the applicant should be treated similarly.
• The applicant relied on the Supreme Court judgment in Arshad Neyaz Khan vs. State of Jharkhand and anr. (SLP (Cr.) No. 3606/2024, decided on 24.09.2025) to argue that Sections 316(2) and 318(4) of the BNS could not coexist.
• The applicant's role was limited to that of a Loan Manager under the command of Anupam Kumar, and he did not benefit from the misappropriated funds.

For the Respondent/State

• The learned Additional Public Prosecutor (APP) opposed the bail application, submitting that the applicant was a permanent employee and actively involved in the fraud.
• It was contended that the applicant and Anupam Kumar created forged loan accounts and sanctioned loans without documentation, misappropriating Rs. 2.52 crores.
• While Rs. 78 lakhs was transferred to Pratik Itankar's account, the entire amount was withdrawn by Anupam Kumar, justifying the clean chit given to Pratik.
• The applicant's account showed a credit of Rs. 25 lakhs, establishing his involvement in the money trail.
• The APP relied on the preliminary investigation report, which indicated that the applicant was still conducting transactions during the investigation, necessitating his exclusion from the banking system.

The Legal Issue

The primary legal questions before the Court were:

1. Whether the applicant had made out a case for bail under Sections 316(2), 316(5), 318(4), and 3(5) of the Bharatiya Nyaya Sanhita, 2023, given the gravity of the allegations and the evidence collected during the investigation.
2. Whether Sections 316(2) and 318(4) of the BNS could coexist in the same set of facts, or if the proceedings were erroneous due to overlapping charges.

Arguments Presented

For the Applicant

• The applicant argued that he was not the mastermind behind the fraud and was merely following Anupam Kumar's instructions.
• It was contended that the clean chit given to Pratik Itankar, who had Rs. 78 lakhs transferred to his account, should extend to the applicant, who had only Rs. 25 lakhs credited to his account.
• Reliance was placed on Arshad Neyaz Khan vs. State of Jharkhand and anr. to argue that Sections 316(2) and 318(4) of the BNS could not coexist, as they pertained to distinct offences.

For the Respondent/State

• The APP argued that the applicant was actively involved in the fraud, as evidenced by the Rs. 25 lakhs credited to his account and his role in granting unauthorized ToDs.
• The preliminary investigation report indicated that the applicant was still conducting transactions during the investigation, demonstrating his continued involvement.
• It was submitted that the clean chit to Pratik Itankar was justified, as the entire Rs. 78 lakhs was withdrawn by Anupam Kumar, whereas the applicant's account showed direct involvement.
• The APP distinguished the judgment relied upon by the applicant, arguing that the coexistence of Sections 316(2) and 318(4) was permissible where the facts created doubt about the specific offence committed.

The Court's Analysis

The Court conducted a detailed examination of the allegations, the preliminary investigation report, and the rival submissions:

1. Involvement in the Fraud: The Court noted that the applicant was actively involved in misappropriating funds, as evidenced by the Rs. 25 lakhs credited to his account and his role in granting unauthorized ToDs on 15.04.2025, despite being on leave. The preliminary investigation report explicitly stated that the applicant and Anupam Kumar had misused their positions to effect the fraud.

   "There is not even an iota of doubt that Anupam Kumar (Chief Manager) (PF no. 175795) and Ganesh Patre (Officer) (PF 203970) have misused their position at the branch and have given effect to this fraud along with the branch sub staff Pratik Itankar."

2. Money Trail: The Court rejected the applicant's contention that he did not benefit from the misappropriated funds, as the Rs. 25 lakhs credited to his account established his involvement in the money trail. The fact that the amount was later transferred to Anupam Kumar's account did not absolve the applicant of his role in the fraud.

3. Clean Chit to Pratik Itankar: The Court observed that the clean chit given to Pratik Itankar was not relevant to the applicant's case, as the circumstances differed. While Rs. 78 lakhs was transferred to Pratik's account, the entire amount was withdrawn by Anupam Kumar, whereas the applicant's account showed direct involvement in the fraud.

4. Coexistence of Sections 316(2) and 318(4) of the BNS: The Court relied on the Supreme Court judgment in Delhi Race Club (1940) ltd. vs. State of U.P. (AIR 2024 SC 4531) and Vikash Kumar vs. State of U.P. (Criminal Misc. Bail Application No. 1381/2026) to hold that there was no bar to charging an accused under both Sections 316(2) and 318(4) of the BNS where the facts created doubt about the specific offence committed. The Court emphasized that the trial court would determine the applicability of the sections at the appropriate stage.

5. Gravity of the Offence: The Court underscored the seriousness of the allegations, involving misappropriation of Rs. 2.52 crores through systemic fraud, which warranted stringent scrutiny. The applicant's role as a Loan Manager, entrusted with processing loan proposals, made his involvement particularly egregious.

The Verdict

The Court rejected the bail application, holding that the applicant had failed to make out a case for enlargement on bail. The key outcomes were:

• The bail application (Criminal Application No. 796/2026) was dismissed.
• The Court directed that the applicant remain in custody pending further investigation and trial.
• The trial court was left to determine the applicability of Sections 316(2) and 318(4) of the BNS at the appropriate stage.

What This Means For Similar Cases

Bail Not Automatic in Financial Frauds

The judgment reinforces that bail is not easily granted in cases involving financial fraud, misappropriation, or criminal breach of trust, particularly where:

• The accused holds a position of trust (e.g., bank officials, loan managers, public servants).
• The fraud involves systemic manipulation, such as forged documents, unauthorized transactions, or misuse of official position.
• The money trail directly implicates the accused, even if the funds were later transferred to a third party.

Practitioners must emphasize the gravity of the offence, the quantum of misappropriation, and the accused's role in opposing bail applications.

Preliminary Investigation Reports Carry Weight

• Courts may rely heavily on preliminary investigation reports conducted by internal authorities (e.g., bank officials, audit teams) to assess the accused's involvement.
• Such reports can establish a prima facie case against the accused, particularly if they detail unauthorized transactions, forged documents, or misuse of position.
• Defence counsel must scrutinize these reports for inconsistencies or procedural lapses to challenge their evidentiary value.

Coexistence of Overlapping Offences

• The judgment clarifies that Sections 316(2) and 318(4) of the BNS (or similar overlapping provisions) can coexist where the facts create doubt about the specific offence committed.
• The trial court will ultimately determine the applicability of the charges, but the mere invocation of overlapping sections does not render the proceedings erroneous.
• Practitioners should argue the distinct elements of each offence to ensure appropriate charges are framed.

Clean Chits Are Not Binding on Courts

• A clean chit given to a co-accused by the Investigating Officer does not automatically entitle another accused to similar treatment, even if the allegations appear similar.
• Courts will examine the specific role, evidence, and money trail associated with each accused to determine their involvement.
• Defence counsel must highlight disparities in treatment between co-accused to strengthen bail arguments.",