1 2026:CGHC:13762 NAFR HIGH COURT OF CHHATTISGARH AT BILASPUR ACQA No. 142 of 2011 Punjab National Bank, A body corporate constituted under the Banking Companies (Acquisition & Transfer of undertakings) Act No. 5 of 1970 and having its Head Office at 7, Bhikhaji Cama Palace, New Delhi inter alia Branch Punjab National Bank, Branch Office Civic Center Bhilai, District Durg (CG); Represented through its: Principal Officer / Power of Attorney Holder D.L. Meena, S/o - Late Shri Gyarsi Lal Meena. ... Appellant versus 1. Anil Agrawal, S/o Late Shri Bangali Lal Agrawal, Aged about 50 years, R/o Quarter No. 10, Old Nehru Nagar, Thana Supela, District - Durg (CG) 2. Vijay Agrawal, S/o Late Shri Bangali Lal Agrawal, Aged about 42 years, R/o Quarter No. 10, Old Nehru Nagar, Thana Supela, District - Durg (CG) 3. Sunil Agrawal, S/o Late Shri Bangali Lal Agrawal, Aged about 44 years, R/o Quarter No. 10, Old Nehru Nagar, Thana Supela, District - Durg (CG) 4. State of Chhattisgarh, Through: District Magistrate Durg (CG) ... Respondent For Appellant : Mr. Sharad Mishra, Advocate For Respondent Nos.1 to 3 : Mr. Shantam Awasthi, Advocate. For Respondent No.4/State : Ms. Ritika Veram, Panel Lawyer. Hon'ble Mr. Ramesh Sinha, Chief Justice Judgment on Board 23.03.2026 1. The appellant has preferred this appeal under Section 378 read with Section 372 of Code of Criminal Procedure, 1973 (for short, ‘CrPC’) questioning the impugned judgment of acquittal dated RAJSHEKHAR SONI Digitally signed by RAJSHEKHAR SONI 2 08.07.2011 passed by the learned Additional Session Judge Durg, District – Durg (C.G.) in Criminal Appeal No. 12/2011, setting aside the order dated 28.01.2011 passed by learned Judicial Magistrate First Class, Durg, District – Durg (C.G.) in Criminal Case No.156/2009, whereby the appellate Court vide order dated 08.07.2011 has acquitted the respondents No.1 to 3 from the charges and conviction under Section 409 of the Indian Penal Code (IPC) of 3 years of rigorous imprisonment and fine of Rs. 3,000/-. 2. Case of the prosecution, in brief, is that the accused Anil Agrawal, Vijay Agrawal and Sunil Agrawal along with lady family members namely Smt. Rama Devi Agrawal, Smt. Uma Devi Agrawal and Smt. Kanta Devi Agrawal were the Directors of the Companies named and styled A.B.S. Steel, A.B.S. Metal, D.M. Engineering and Quality Ice Cream. All the aforesaid companies availed financial accommodation from the complainant Punjab National Bank to the extent of Rs. 34.09 Crores. The aforesaid loan was granted by the Bank after scrutiny of all the papers and the respective borrowers were required to avail the said loan after execution of agreement of hypothecation and indemnity whereby the repayment of loan was subjected to the security of the hypothecated goods. After availing the said loan of the raw- materials, stocks in course of trade, the financial products and all the machineries of the plants were hypothecated in favour of the complainant Bank thereby the amount of loan availed was subjected to charge in favour of the Bank. 3 3. After availing the loan, the accused along with its other Directors started transactions and availed the loan to its utmost advantage. According to the terms of repayment, the accused / borrowers were required to maintain the margin of hypothecation to the extent of limit outstanding with respect to the loan. The loan was to be repaid according to the installments as was agreed upon. All of a sudden, while the outstanding of the loan was due the aforesaid accused who were Directors and were in helm of the affairs with the other family members overnight ran away by selling the hypothecated stocks wherein first charge of the Bank was created for repayment of the loan. On the facts having come to fore, the complainant Bank made an inspection in the factory premises and it was discovered that all the hypothecated goods wherein charge was created in favour of the Bank have been sold out without making the deposit of the sale proceeds in the Bank to liquidate the loan. 4. The hypothecated properties i.e. all the movable assets, stocks whether finished or in course of process were held by the accused for and on behalf of the Bank and they do not have any right to sale the properties without any intervention of the Bank in as much as they were holding the properties in trust for the loan availed by them as security thereof. Naturally, therefore, by illegal sale of such stocks, criminal breach of trust was committed in respect of the public money for which the complainant Bank is the custodian. The sale of such hypothecated stocks without making the deposit of sale proceeds 4 in the Bank tantamount to gross criminal breach of trust. As the right of the Bank extinguished by such criminal act and by making wrongful gain of the properties, by such illegal sale, the right of the Bank extinguished as the amount of outstanding dues was not liquidated. 5. Under these circumstances, a complaint was lodged by the Bank on 09th May 2009. The said complaint was made on behalf of the Bank by the Officer of the Bank namely Mr. Akhilesh Tiwari as he was posted in the Punjab National Bank and was under bounden duty to protect the interest of the Bank and its properties in the capacity of a public servant. Pursuant to such complaint made, the police investigated the crime and an offence was made out under Section 406 read with Section 34 of the IPC. During the investigation, the female members of the accused family namely Smt. Rama Devi Agrawal, Smt. Uma Devi Agrawal and Smt. Kanta Devi Agrawal have absconded and under these circumstances the Police after investigation filed a charge sheet before the learned JMFC, District – Durg (C.G.), against the accused No. 1 to 3 under Section 409 of IPC. 6. So as to prove the complicity of the accused/respondent No.1 to 3 in the crime in question, the prosecution has examined as many as 13 witnesses in support of its case. Statement of the accused persons under Section 313 of the CrPC was also recorded in which they pleaded their innocence and false implication in the case. The accused persons did not give any defense evidence in their defence. 5 7. After evaluating the evidence, the learned Judicial Magistrate came to the conclusion that criminal breach of trust was committed and the finding was arrived at that, all the hypothecated goods having been sold and are not available in the factory premises thereby a criminal breach of trust was committed under Section 409 of IPC. Accordingly, vide order dated 28.01.2011 the accused were convicted for rigorous imprisonment of three years and fine of Rs. 3000/- and in default three months imprisonment was ordered for the offence under Section 409 of the IPC. 8. Being aggrieved by the aforesaid judgment dated 28.01.2011, the accused filed an appeal before the Additional Sessions Judge, Durg (C.G.) and the Additional Sessions Judge in the Criminal Appeal No. 12/2011 by the order dated 08.07.2011 acquitted the respondents No.1 to 3 from all the charges under Section 409 of the IPC. Hence, this acquittal appeal has been preferred by the appellant questioning the impugned judgment dated 08.07.2011. 9. Learned counsel for the appellant vehemently argued that the learned appellate Court while evaluating the evidence of the witnesses came to a wrong finding and was led away by the wrong notion and mistaken fact that, the amount of loan has been liquidated. Such finding was completely wrong whereby the learned appellate Court held the sway in favour of the accused for acquitting them for the offence without making a careful scrutiny of documents placed. It is further submitted that the 6 learned appellate Court erred in arriving a wrong interpretation that the hypothecated goods though were sold and the sale proceeds having been deposited in the Bank, the offence under Section 409 is not made out against the accused, and this fact is contrary to the documents and records which purports that the stock verification report and the other documents which were placed on record by the prosecution. 10. It is further submitted by learned counsel for the applicant that the accused were holding stocks in their premises for and on behalf of the Bank and, therefore, any shortcoming of the hypothecated goods were to be predominantly proved with cogent reason for the accused. Thus, the burden to prove a particular fact of shortcoming lies on them thereby to prove the innocence. Hence, the judgment of acquittal is liable to be set aside. 11. On the other hand, learned counsel for private respondents No.1 to 3 submits that the accused/respondent Nos. 1 to 3 most respectfully submit that the impugned judgment passed by the learned Appellate Court is just, proper, and in strict accordance with law, wherein the learned Appellate Court, upon a meticulous re-appreciation of the entire evidence available on record, has rightly set aside the judgment of conviction rendered by the learned Trial Court. It is contended that the findings recorded by the learned Trial Court were based on conjectures, surmises, and misappreciation of material evidence, whereas the learned Appellate Court has corrected such errors by adopting a legally 7 sustainable and evidence-based approach. The Appellate Court has duly considered the inconsistencies, contradictions, and inherent improbabilities in the prosecution case, and has arrived at a well-reasoned conclusion that the prosecution has failed to establish the guilt of the accused beyond reasonable doubt. In the present case, no such perversity, illegality, or material irregularity is discernible from the impugned judgment. 12. On the other hand, learned State counsel also opposed the prayer made by the appellant in the instant appeal and suports the impugned judgment of acquittal passed by the appellate Court, and submits that the impugned judgment passed by the learned appellate Court is just and proper warranting no interference. 13. I have heard learned counsel for the parties, considered their rival submissions made herein-above and went through the records with utmost circumspection. 14. The first question for consideration before this Court would be, whether the respondents No.1 to 3 has committed the crime of criminal breach of trust or not? 15. Akhilesh Tiwari (PW-1), Deputy Manager, Punjab National Bank, Civic Centre, Bhilai, has stated in his examination-in-chief that the accused persons had availed various credit facilities from his branch, namely, ABS Metal Cash Credit of Rs.10 crores, Term Loan of Rs.71 lakhs; ABS Steel Cash Credit of Rs.14 crores; DM Engineering Cash Credit of Rs.8 crores and Term Loan of Rs.86 8 lakhs; and Quality Ice-cream Term Loan of Rs.50 lakhs. Against these facilities, factory premises, hypothecated stock, building, land, etc., were offered as security. He further deposed that in May 2009, he, along with Auditor Satyajit Mishra and Manager M.G. Soman of Nehru Nagar Branch, visited the residence of the accused persons but did not find them there, and upon visiting the factory, the employees informed that the accused were not present. There were rumors in the market regarding the absconding of the accused. Upon not being able to trace them, he informed his Higher Officials and also the Police for ensuring security of the factory. The written intimation (Ex.-P/2) was also given by him. 16. In cross-examination, Akhilesh Tiwari (PW-1) admitted that he could not name any person who informed him about the alleged absconding of the Directors of ABS Steel, ABS Metal, DM Engineering and Quality Ice-cream. He further stated that he and the two officials got the closed factory opened upon request. Around 10–15 persons were present outside the factory. They entered the factory on 09.05.2009 at about 7:00 PM, where employees and a watchman were present, who stated that they had not been paid their salaries. They inspected the factory but due to darkness could not inspect every corner. No panchnama was prepared regarding the stock available in the factory. He further stated that Ex.P-1 was typed at Raipur upon instructions of his superior officer and was submitted at the Police Station at about 12:00 midnight. He admitted that Ex.P-1 does not mention 9 the time of visit to the factory. He further admitted that prior to the incident, he used to regularly monitor the banking transactions of the accused but could not state without documents whether the loan installments were being regularly paid prior to the incident. In further cross-examination, the witness stated that prior to 09.05.2009, he had never visited the factory of the accused for routine inspection. He also admitted that the accused had also mortgaged substantial family assets with the bank. 17. In the statements of the accused persons/respondents No.1 to 3 under Section 313 of the CrPC, the accused admitted availing loans from Punjab National Bank and also admitted their signatures on the seizure memo (Ex.P-3) relating to mortgaged properties. 18. Rajan Kumar (PW-2), Chief Manager, deposed that copies of sale deeds of the properties of accused and stock reports of ABS Steel, ABS Metal and DM Engineering were seized by Police Station Jamul under seizure memo (Ex.P-2). The mortgaged property documents were seized under Ex.P-3 and later returned to him under Supurdnama (Ex.P-4). Articles 1 to 19 (photocopies 1-C to 19-C) were such documents. In cross-examination, he admitted that these documents related to properties owned by the accused and mortgaged to the bank. He further admitted that in case of default, the bank has the right to sell such mortgaged properties, and that after May 2009, due to non-payment, the bank had sold such properties and recovered the loan amount. He further stated that regular repayment prior to May 2009 could 10 only be confirmed upon perusal of records. He also admitted that prior to May 2009, the accused regularly submitted stock reports and the bank was satisfied with their transactions. 19. Manohar Kapse (PW-12), Senior Manager, stated that in May 2009, the Police seized stock reports and documents relating to mortgaged properties under Exs.P-2 and P-3. In cross- examination, he admitted that banks grant loans against adequate security and can sell such property upon default. In the present case also, the bank had sold the mortgaged assets to recover its dues, which indicates that no unlawful transfer or misappropriation of such assets was carried out by the accused. 20. Sanjay Pundhir (PW-13), Investigating Officer, stated that he registered FIR (Ex.P-19) on the basis of written complaint of Akhilesh Tiwari. He seized documents relating to properties under Ex.P-3. In cross-examination, he admitted that there is no record showing when Ex.P-1 was received. He further admitted that he could not state exactly when he visited the factory and there is no record of such visit. 21. The Investigating Officer further admitted that upon visiting the factory, he did not seal it. He stated that at that time, no offence had been registered. He admitted that even after registration of offence, no panchnama of stock was prepared, nor was any record made to show that no stock was available. He also admitted that no guard allegedly posted by the bank was examined as a witness. 11 22. He further admitted that despite allegations in Ex.P-1, regarding threats of removal of goods, no preventive steps like sealing the factory were taken. No search panchnama of the house or factory was prepared. He categorically admitted that there is no evidence to show that the accused misappropriated hypothecated goods. He further admitted that no loan agreement or hypothecation deed was produced in the case, and hence, there is no documentary proof of the extent of hypothecated goods. He also admitted that the entire loan amount along with interest has been recovered by the bank. 23. Joseph Ekka (PW-11), Manager, admitted that the accused had mortgaged their properties and that in case of default, the bank could sell such properties. He also admitted that prior to the incident, stock position was found correct and regular stock reports were submitted by the accused, which satisfied the bank. 24. Bhaskar Dubey (PW-4), a factory employee, stated that the accused used to go out of the State with family once a year for one to two months. In May 2009 also, they had gone out. Upon returning on 9–10 May 2009, he found bank guards posted at the factory, who did not allow entry. He further stated that the factory generally had 4–5 tons of stock. Another witness, Dinesh, corroborated this fact. These statements indicate that the accused had not absconded but had gone on a customary family trip, and that the factory was under bank control. No panchnama regarding stock during this period was prepared. 25. Section 409 of the IPC reads as under: 12 “409. Criminal breach of trust by public servant, or by banker, merchant or agent.— 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, mer-chant, 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.” 26. Section 409 of the IPC requires proof of criminal breach of trust by a banker or agent entrusted with property. The prosecution was required to establish that the accused persons, being entrusted with property, committed misappropriation. However, from the evidence on record, it is evident that the immovable properties (Articles 1 to 19) were mortgaged with the bank and no evidence has been adduced to show that the accused transferred or misappropriated the same. The alleged stock reports and hypothecation details have not been proved. No loan agreement or hypothecation deed has been brought on record. On the contrary, it is established that the bank has recovered its dues by sale of mortgaged properties, and even the Investigating Officer admitted that the entire loan amount stands repaid. No panchnama regarding stock was prepared at any stage. 27. It is thus apparent that the learned trial Court failed to properly appreciate the material contradictions, omissions, and admissions of the prosecution witnesses, and also failed to consider the absence of crucial documentary evidence such as loan agreements and hypothecation deeds. The conviction 13 recorded by the trial Court was therefore based on incomplete and improperly appreciated evidence. 28. Upon a comprehensive re-evaluation of the entire evidence and the findings recorded by the learned appellate Court, this Court finds that the appellate Court has undertaken a meticulous and legally sound appreciation of the evidence on record. The conclusions drawn by the appellate Court are neither perverse nor contrary to the material available on record, but rather reflect a plausible and reasoned view consistent with settled principles of criminal jurisprudence. 29. It is well settled that in an appeal against acquittal, the presumption of innocence stands further strengthened, and unless the findings of the appellate Court are manifestly illegal, grossly erroneous, or perverse, interference is not warranted. In the present case, the prosecution has failed to establish the essential ingredients of the offence under Section 409 of IPC, particularly the element of entrustment and subsequent misappropriation. 30. The absence of foundational documents such as the loan agreement and hypothecation deed, coupled with the admitted recovery of the loan amount by the bank, completely demolishes the substratum of the prosecution case. The evidence on record does not demonstrate any dishonest intention or criminal breach of trust on the part of the accused. 14 31. Accordingly, this Court is of the considered view that the judgment of acquittal passed by the learned appellate Court does not suffer from any illegality, infirmity, or perversity warranting interference. Therefore, the judgment of the learned appellate Court setting aside the conviction and acquitting the respondents is affirmed. 32. Accordingly, the instant acquittal appeal being devoid of merit, is liable to be and is hereby dismissed. 33. Registry is directed to send a certified copy of this judgment along with the original record of the case to the trial court concerned forthwith for necessary information and compliance. Sd/- (Ramesh Sinha) Chief Justice Rajshekhar