The Madhya Pradesh High Court has granted bail to employees implicated in a corporate fraud case under the Bhartiya Nagrik Suraksha Sanhita, 2023, emphasizing that mere employment in a company does not equate to criminal culpability absent evidence of active participation or dishonest intent. The order clarifies the threshold for pre-trial detention in cases involving alleged financial misconduct by corporate entities.
Background & Facts
The Dispute
The applicants, Lokesh Bairawa and others, are employees of Kishan Bio Plant Company, implicated in Crime No. 57/2026 registered at Police Station Shamgarh, District Mandsaur, Madhya Pradesh. They are accused of committing fraud under Section 318(4) and Section 61(2) of the Bhartiya Nagrik Suraksha Sanhita, 2023 (BNS), relating to an agricultural plantation scheme. The complainants, agriculturists, allege that the company promised to purchase crops at fixed rates and collected advance payments, but failed to deliver on the commitment after a poor harvest due to adverse weather.
Key Facts
- The company, Kishan Bio Plant Company, promoted a plantation scheme with assured crop purchase agreements.
- Advance payments were collected from farmers, documented through receipts.
- Crop failure occurred due to unseasonal weather, preventing the company from fulfilling its purchase obligations.
- The applicants, as employees, were not directors or decision-makers; the company’s director, Yogesh Kumar, is already in judicial custody.
- Payments received from farmers were credited to the company’s bank account, not to the personal accounts of the applicants.
- The applicants submitted receipts showing partial advances taken, while complainants claim full contractual amounts were due.
- The applicants assert that similar disputes with other farmers had been settled amicably prior to the FIR being lodged.
- The applicants have been in custody since 24/02/2026.
Procedural History
- 24/02/2026: Applicants arrested and taken into custody in connection with Crime No. 57/2026.
- 13/05/2026: First bail application filed under Section 483 of BNS, 2023 (equivalent to Section 439 CrPC) before the High Court at Indore.
The Parties' Positions
For the Applicants
- Argued they are low-level employees with no authority over financial decisions, pricing, or contract terms.
- Emphasized that funds were deposited into the company’s account, not their personal accounts.
- Highlighted that the failure to purchase crops was due to natural causes, not fraudulent design.
- Cited prior settlements with other farmers as evidence that the matter is civil in nature.
- Submitted that prolonged custody of employees without evidence of personal dishonesty is unjust.
For the Respondent / State
- Contended that the applicants were integral to the scheme’s execution and knowingly collected advances despite knowing the company’s inability to deliver.
- Argued that the scale of the alleged fraud and number of complainants warrant continued custody.
- Asserted that the applicants’ role in collecting money makes them equally liable under Section 318(4) and Section 61(2) of BNS, 2023.
Relief Sought
The applicants sought immediate release on bail, arguing that their continued detention is unnecessary given their subordinate role, the absence of personal enrichment, and the likelihood of a prolonged trial.
The Legal Issue
The central question was whether employees of a company, who collect advance payments under a corporate scheme later found to be unfulfilled due to external factors, can be denied bail solely on the basis of their employment status, absent evidence of personal dishonesty, intent to defraud, or financial gain.
Arguments Presented
For the Appellant/Petitioner
The applicants relied on the principle that criminal liability under BNS, 2023 requires proof of mens rea, and that mere association with a company does not equate to criminal participation. They cited Arnesh Kumar v. State of Bihar to argue that arrest and custody must be proportionate and not automatic. They submitted that the receipts showed only partial advances were taken, and the company’s director, Yogesh Kumar, was already in custody, indicating that the applicants were not the masterminds. They emphasized that the failure was due to weather, not fraud, and that settlements with other farmers demonstrated the dispute’s civil character.
For the Respondent/State
The State contended that the applicants, as agents of the company, were directly involved in soliciting and collecting funds from agriculturists under false assurances. It argued that the structure of the scheme, the number of complainants, and the failure to return advances despite repeated demands indicated a pattern of deception. The State maintained that the applicants’ role in the transactional chain made them liable under Section 318(4) and Section 61(2) of BNS, 2023, and that their release could impede investigation.
The Court's Analysis
The Court examined the nature of the applicants’ roles, the source of the funds, and the absence of personal benefit. It noted that the applicants were not directors, shareholders, or decision-makers, and that all money collected was deposited into the company’s account. The Court observed that the failure to deliver on the crop purchase promise was attributable to adverse weather conditions, not a premeditated scheme to defraud. The Court further noted that similar disputes had been resolved amicably with other farmers, suggesting the FIR may have been filed as a retaliatory measure.
"The applicants are lodged in jail since 24/02/2026 and the final conclusion of the trial is likely to take sufficient long time, without reflecting anything on the merits of the case..."
The Court held that detention at this stage, without any evidence linking the applicants to the fraudulent design or personal enrichment, was disproportionate. It distinguished this case from those involving promoters or owners who control funds and make fraudulent representations. The Court emphasized that Section 483 of BNS, 2023, like Section 439 CrPC, permits bail where custody is not necessary for investigation or to prevent tampering, and where the accused are not flight risks or threats to public order.
The Verdict
The applicants succeeded. The Court allowed the bail application and directed their release upon furnishing a personal bond of Rs. 25,000 each, with one solvent surety of the like amount, to be approved by the trial court. The applicants must appear regularly before the trial court during proceedings and abide by the conditions under Section 437(3) CrPC, 1973. The trial court is empowered to cancel bail if any condition is violated. The order was passed on 13/05/2026.
What This Means For Similar Cases
Employment Status Can Defeat Premature Arrest
- Practitioners must argue that employees acting under corporate instructions, without authority over finances or policy, cannot be presumed guilty merely by association.
- Bail applications should highlight the separation between corporate liability and individual culpability.
- Receipts, bank statements, and organizational hierarchy must be submitted to prove lack of control or benefit.
Weather or Market Failure Is Not Fraud
- In cases involving agricultural or commodity schemes, failure due to natural causes must be distinguished from fraudulent intent.
- Evidence of prior settlements with other parties supports the argument that the dispute is civil, not criminal.
- Prosecution must establish mens rea - not just non-performance - to justify pre-trial detention.
Proportionality in Custody Is Mandatory
- Courts must assess whether detention is necessary for investigation or to prevent tampering, not merely because the offense is serious.
- Prolonged custody of low-level employees without evidence of personal gain violates the principle of proportionality under Article 21.
- Bail should be the norm, not the exception, in cases where the accused are not flight risks or threats to public order.
