Bank Manager Facilitating Loan to Fraudulent Account can be Prosecuted for Criminal Breach: PHHC

The Punjab & Haryana High Court has clarified that bank managers exercising dominion over public funds can be prosecuted for criminal breach of trust if they facilitate the disbursement of loans into fraudulent accounts.

Justice Manisha Batra was hearing a petition challenging a revisional court's order that directed the framing of an alternative charge under Section 409 of the IPC. The petitioner, a former bank manager, contended that the ingredients of criminal breach of trust were not met and that the allegations primarily concerned procedural irregularities in loan processing for which he was already facing trial under Sections 420, 467, 468, 471, and 477-A of the IPC.

Key Takeaways

Dominion as Entrustment

Bank managers are deemed to have 'dominion' over bank property, and any dishonest disposal of funds contrary to legal mandates satisfies the criteria for criminal breach of trust.

Alternative Charges Permissible

Under Section 221 of the Cr.P.C., courts can frame alternative charges when the exact nature of the offence is yet to be determined by evidence during the trial.

Concurrent Civil and Criminal Liability

Pending civil recovery proceedings by a bank do not absolve an official from criminal prosecution for fraud and misappropriation.

Conspiracy Broadens Accountability

When IPC Section 120-B is invoked, the court must view the chain of events holistically rather than isolating individual acts of the accused.

Judicial Clarification on Section 409 IPC

The Punjab and Haryana High Court observed that Section 409 of the IPC is an aggravated form of criminal breach of trust, requiring that the accused, in the capacity of a banker or public servant, dishonestly misappropriated or disposed of property entrusted to them. The petitioner argued that there was no 'personal entrustment' of funds. However, the Bench rejected this, noting that the position of a Manager inherently involves control over the bank's funds.

The Punjab and Haryana High Court explained the statutory provision under IPC Section 409 on criminal breach of trust that "The expression 'entrustment' also includes entrustment of dominion over property. In the facts of the present case, the allegation is that the petitioner, by virtue of his position as Bank Manager, was exercising control and dominion over the Bank's funds and was instrumental in facilitating their disbursement into an account allegedly opened in the name of a person who had not sought or received the loan. Whether such dominion was exercised dishonestly... are questions which require appreciation of the evidence collected during investigation and cannot be conclusively determined at the stage of framing of charge."

Ratio

A bank manager, by virtue of their office, exercises dominion over bank funds. If such funds are dishonestly disbursed into accounts opened through forgery or without the consent of the purported beneficiary, a prima facie case for criminal breach of trust under Section 409 IPC is established. Furthermore, the court is empowered to frame alternative charges under Section 221 CrPC when the specific legal characterization of the act remains to be settled by trial evidence.

Background

The case originated from an FIR registered in 2019 by a complainant who discovered that a loan of approximately Rs. 59.75 lakhs had been sanctioned in her name without her knowledge. It was alleged that the petitioner, while serving as the Bank Manager in 2011, conspired with others to open a fake account and siphon off the loan amount. While the trial court initially declined to frame charges under Section 409 IPC, the Revisional Court reversed this, leading the petitioner to move the Punjab and Haryana High Court. The petitioner relied on Asoke Basak v. State of Maharashtra ( "2010 (10) SCC 660": 2010 CaseBase(SC) 1100) and Mr. Robert John D’Souza and others v. Mr. Stephen V. Gomes and another to argue that mere holding of an office does not attract Section 409. The Punjab and Haryana High Court distinguished these precedents, noting that specific allegations of active participation in the conspiracy existed in the present case.

Case Details:

Case No.: CRM-M No.25862 of 2026

Case Title: Yadvinder Singh Dhull Vs. State of Haryana and another

Appearances:

For the Petitioner(s): Mr. Aditya Sanghi, Advocate

For the Respondent(s): Mr. Apoorv Garg, Addl. A.G., Haryana; Mr. Naresh Kumar Chhokar, Advocate and Mr. Ram Bhati, Advocate

Source: 2026 CaseBase(PNH) 20985