Case Background
The case started from a letter written by the Area Manager of North Bihar Gramin Bank, Muzaffarpur, to the Officer-in-charge of Paroo Police Station, Muzaffarpur. The complaint was against the Branch Manager of North Bihar Gramin Bank, Sarmastpur branch, who is the petitioner in this criminal revision.
According to the complaint, during the petitioner’s tenure from 2005 to 2008, serious financial irregularities were detected in the audit. These related to sanctioning of different types of loans and were alleged to have caused a financial loss of Rs. 96,97,000/-. The loans in question were:
- Kisan Credit Card (KCC) loans in 190 accounts,
- Long Term Loan (L.T.L.) in 13 accounts,
- General Credit Card (G.C.C.) loans in 57 accounts, and
- Small Credit Card (S.C.C.) loans in 49 accounts.
The bank alleged that no proper documents regarding address and parentage of the loanees were obtained, and that loans were shown in the names of fake persons. On this basis, Paroo P.S. Case No. 109 of 2009 was registered and investigated.
After investigation, charge-sheet No. 47/14 dated 28.02.2017 was submitted. The case was tried as G.R. No. 1006 of 2009, Trial No. 5405 of 2018 before the Judicial Magistrate 1st Class-cum-Additional Munsif, Muzaffarpur (West).
The trial court convicted the petitioner under Section 409 of the Indian Penal Code. He was sentenced to three years’ rigorous imprisonment and a fine of Rs. 10,000/-, with three months’ simple imprisonment in default of payment of fine. He was acquitted of charges under Sections 420, 467, 468 and 471 IPC.
The petitioner filed Criminal Appeal No. 9 of 2019 before the Sessions Judge, Muzaffarpur. The appellate court upheld the conviction and sentence, agreeing that he had sanctioned loans in gross violation of bank rules and norms, leading to heavy loss and non-identification of loanees.
Aggrieved by concurrent findings of the trial and appellate courts, the petitioner approached the Patna High Court in Criminal Revision No. 1163 of 2019. The judgment in revision was delivered on 22.07.2025 by Hon’ble Mr. Justice Jitendra Kumar.
What the Court Examined and Decided
In the Patna High Court, the petitioner attacked the conviction on both legal and factual grounds. The Court first heard arguments from the petitioner’s counsel, the Additional Public Prosecutor for the State, and the counsel representing the bank.
The petitioner’s main legal argument was that he was a public servant and thus could not be prosecuted without prior sanction under Section 197 of the Code of Criminal Procedure. The defence claimed that absence of such sanction vitiated the entire trial.
Secondly, it was argued that the basic ingredients of Section 409 IPC were not made out. According to the petitioner, even taking the prosecution case at its best, the allegation only showed “irregularities” in sanctioning loans, not entrustment of money followed by dishonest misappropriation for his own benefit.
The defence further pointed out that no loan ledgers were produced to prove that addresses or particulars were missing, or that loans were fake. It was also submitted that there was no evidence that the petitioner gained any unlawful benefit or that the bank suffered unrecovered loss due to his acts.
To support his stand, the petitioner produced defence witnesses (D.W.1 to D.W.6), all of whom were loanees who had received loans during 2005–2008. They stated that they had indeed taken loans and that there was no irregularity in sanctioning their loans. The petitioner himself deposed as D.W.7.
On the other hand, the State and the bank supported the conviction. They argued that both courts below had appreciated the evidence and concurrently held the petitioner guilty under Section 409 IPC. They also stressed that in revision, the High Court’s power is limited: it cannot re-appreciate evidence like an appellate court unless there is glaring illegality, perversity, or miscarriage of justice.
They further argued that a bank officer is not entitled to protection under Section 197 Cr.PC, as he is not removable only by or with the sanction of the Government.
Scope of Revisional Jurisdiction
Before touching the evidence, the Patna High Court explained the scope of its revisional powers under Sections 397 and 401 Cr.PC. The Court described revisional power as “paternal or supervisory” jurisdiction aimed at correcting miscarriage of justice. However, it is discretionary and not equal to appellate power.
The Court noted that ordinarily it does not re-appreciate evidence when both trial and appellate courts have already done so, unless there are exceptional circumstances like:
- lack of jurisdiction,
- glaring illegality,
- illegal rejection of material evidence,
- reliance on inadmissible evidence,
- overlooking clinching evidence,
- findings based on no evidence, or
- perverse appreciation of evidence causing miscarriage of justice.
The Court cited multiple Supreme Court judgments on this point, including Akalu Ahir v. Ramdeo Ram, K. Chinnaswami Reddy v. State of A.P., Duli Chand v. Delhi Administration, Janta Dal v. H.S. Chowdhary, Vimal Singh v. Khuman Singh, State of Kerala v. Puttumana I.J. Namboodiri, and others up to Malkeet Singh Gill v. State of Chhattisgarh.
On Sanction under Section 197 Cr.PC
The Court first dealt with the argument about prior sanction. It accepted that the petitioner, as Branch Manager of North Bihar Gramin Bank, was a “public servant” under Section 21 IPC, since he was in the service of a corporation established under statute.
However, the Court clarified that for protection under Section 197 Cr.PC, mere status as a public servant is not enough. The key requirement is that the person must not be removable from office except by or with the sanction of the Government. Officials of public sector or nationalised banks do not fall in that category.
Relying on Supreme Court decisions in A. Sreenivasa Reddy v. Rakesh Sharma, S.K. Miglani v. State (NCT of Delhi) and K. Ch. Prasad v. J. Vanalatha Devi, the Court held that while bank officers are public servants for some purposes, they cannot claim protection of Section 197 Cr.PC in IPC prosecutions because they are not removable only with Government sanction.
The Court quoted at length from A. Sreenivasa Reddy, where the Supreme Court had clearly ruled that Section 197 does not apply to bank officers even if they are public servants in a wider sense. The Court therefore rejected the petitioner’s objection on sanction and held that the prosecution was not vitiated on that ground.
On Ingredients of Section 409 IPC and Evidence
The Court then turned to the core question: whether the conviction under Section 409 IPC was legally sustainable.
The Court set out Section 409 IPC and explained, with reference to several Supreme Court judgments, that for criminal breach of trust by a public servant or banker, the prosecution must prove:
- Entrustment of property or dominion over property to the accused,
- Dishonest misappropriation, conversion, use, or disposal of that property,
- Mens rea (dishonest intention), and
- Violation of law or contract in dealing with that property.
The Court relied on N. Raghavendra v. State of A.P., Chelloor Mankkal Narayan Ittiravi Nambudiri v. State of Travancore-Cochin, Onkar Nath Mishra v. State (NCT of Delhi), Mir Nagvi Askari v. CBI, Sudhir Shantilal Mehta v. CBI, and Ram Narayan Popli v. CBI to underline that two essential parts must exist: creation of an obligation over the property and dishonest handling of it in breach of that obligation.
With these principles in mind, the Court examined the actual evidence led at trial.
Assessment of Prosecution and Defence Evidence
On the prosecution side, 11 witnesses were examined:
- P.W.1 – a retired bank manager, who only produced the audit report and admitted he knew nothing about the case facts,
- P.W.2 – the informant and Senior Manager who lodged the FIR on the basis of the audit report,
- P.W.3 – a retired assistant manager, who also knew nothing about the case,
- P.W.4 to P.W.9 – all Investigating Officers,
- P.W.10 – the auditor (Assistant Regional Manager) who conducted the audit, and
- P.W.11 – a manager at the bank head office, who was only a document witness.
P.W.2 stated that the audit conducted from 10.02.2009 to 14.02.2009 revealed a defalcation of Rs. 96,97,000/- during 2005–2008 and that in 309 loan accounts, addresses and other details of loanees were missing.
However, P.W.10, the auditor, in his cross-examination clearly stated that he had not used the word “defalcation” in his audit report. He had only pointed out irregularities because details and documents regarding debtors were not found in the ledgers.
The Court noted that the entire case was documentary in nature. The primary evidence to prove irregular sanctioning and absence of loanee details should have been the ledgers of the specific loan accounts. Yet, no loan ledger was produced and exhibited in court by the prosecution.
Instead, only audit reports and departmental documents were exhibited. The Court held that an audit report is not primary evidence of the loan transactions themselves but only reflects the auditor’s observations and opinions. Without producing the original ledgers and loan files, the prosecution could not prove, beyond reasonable doubt, that loans were wrongly sanctioned to non-existent or untraceable persons.
On the defence side, D.W.1 to D.W.6 were loanees who had taken loans during the petitioner’s tenure. They all deposed that they had obtained loans and there was no irregularity in sanctioning their loans. The petitioner himself stepped into the witness box as D.W.7.
Considering this, the Court found that there was no direct evidence of misappropriation by the petitioner. There was also no evidence that he had personally gained any wrongful benefit or that the bank’s alleged loss was directly linked to any dishonest act by him. The material on record, at best, showed procedural irregularities, not criminal breach of trust.
Finding of Perversity and Final Decision
The Patna High Court concluded that both the trial court and the appellate court had convicted the petitioner on the basis of conjectures and surmises rather than solid evidence. The crucial documentary proof, namely the loan ledgers, was never produced. The conviction was thus based on a perverse appreciation of evidence.
In view of this, the High Court invoked its revisional jurisdiction to correct the miscarriage of justice. It held that there was no cogent evidence to prove the prosecution case beyond reasonable doubt and that the essential ingredients of Section 409 IPC were not established.
Accordingly, the Court set aside the judgments of the trial court and the appellate court, allowed the criminal revision, and acquitted the petitioner of all charges. The petitioner’s bail bonds were discharged. The Court also directed that the lower court records be sent back to the concerned court along with a copy of the judgment.
Why This Judgment Matters
This judgment is important for bank employees and other officials who deal with public money and loan sanctions. It shows that while internal audits and departmental findings may point to irregularities, criminal punishment under Section 409 IPC cannot be based only on audit opinions or suspicions.
For a conviction of criminal breach of trust, the prosecution must bring primary documents and clear proof of entrustment and dishonest misappropriation. Missing addresses in records or non-compliance of circulars, without more, may lead to departmental action, but not necessarily to criminal conviction.
The judgment also reassures employees of public sector banks that they cannot claim blanket protection under Section 197 Cr.PC simply because they are treated as public servants. However, at the same time, it protects them from wrongful convictions when the evidence is incomplete or weak.
For borrowers and the general public, the case highlights how courts insist on strict proof before branding someone as a criminal for alleged loan fraud. It underlines that accusations of “defalcation” must be supported by hard evidence like ledgers, loan files, and clear proof of misappropriation, not just audit remarks.
Legal Issues and Answers
- Issue: Was prior sanction under Section 197 Cr.PC necessary before prosecuting the petitioner, a bank branch manager, for offences under the IPC?
Answer: No. The Patna High Court held that although the petitioner is a public servant under Section 21 IPC, he is not a public servant removable only by or with Government sanction. Therefore, Section 197 Cr.PC does not apply. - Issue: Did the prosecution prove the offence of criminal breach of trust under Section 409 IPC against the petitioner beyond reasonable doubt?
Answer: No. The Court held that there was no primary evidence like loan ledgers, no direct proof of misappropriation, and no cogent material to show dishonest use or conversion of bank funds by the petitioner. The conviction was based on conjecture and perverse appreciation of evidence and was therefore set aside.
Cases Cited by the Court
- Akalu Ahir and Ors. v. Ramdeo Ram, (1973) 2 SCC 583
- K. Chinnaswami Reddy v. State of A.P., 1962 SCC Online SC 32
- Duli Chand v. Delhi Administration, (1975) 4 SCC 649
- Janta Dal v. H.S. Chowdhary & Ors., (1992) 4 SCC 305
- Vimal Singh v. Khuman Singh & Anr., (1998) 7 SCC 323
- State of Kerala v. Puttumana I. J. Namboodiri, (1999) 2 SCC 452
- Thankappan Nadar & Ors. v. Gopala Krishnan, (2002) 9 SCC 393
- Jagannath Chaudhary v. Ramayan Singh, (2002) 5 SCC 659
- Bindeshwari Prasad Singh @ B.P. Singh & Ors. v. State of Bihar (Now Jharkhand) & Anr., (2002) 6 SCC 650
- Manju Ram Kalita v. State of Assam, (2009) 13 SCC 330
- Amit Kapoor v. Ramesh Chander, (2012) 9 SCC 460
- Ganesha v. Sharanappa & Anr., (2014) 1 SCC 87
- Shlok Bhardwaj v. Runika Bhardwaj & Ors., (2015) 2 SCC 721
- Sanjaysinh R. Chavan v. D. G. Phalke, (2015) 3 SCC 123
- Malkeet Singh Gill v. State of Chhattisgarh, (2022) 8 SCC 204
- A. Sreenivasa Reddy v. Rakesh Sharma, (2023) 8 SCC 711
- S.K. Miglani v. State (NCT of Delhi), (2019) 6 SCC 111
- K. Ch. Prasad v. J. Vanalatha Devi, (1987) 2 SCC 52
- N. Raghavendra v. State of A.P., (2021) 18 SCC 70
- Chelloor Mankkal Narayan Ittiravi Nambudiri v. State of Travancore-Cochin, (1952) 2 SCC 392
- Onkar Nath Mishra v. State (NCT of Delhi), (2008) 2 SCC 561
- Mir Nagvi Askari v. CBI, (2009) 15 SCC 643
- Sudhir Shantilal Mehta v. CBI, (2009) 8 SCC 1
- Ram Narayan Popli v. CBI, (2003) 3 SCC 641
Case Details
Case Number: Criminal Revision No. 1163 of 2019 (arising out of Paroo P.S. Case No. 109 of 2009, G.R. No. 1006 of 2009, Trial No. 5405 of 2018; Criminal Appeal No. 9 of 2019)
Case Title: Birendra Kumar v. The State of Bihar & Anr.
Citation: 2025(3) PLJR 693
Court: High Court of Judicature at Patna
Coram: Hon’ble Mr. Justice Jitendra Kumar
Date of Judgment (Criminal Revision): 22.07.2025
Counsels:
- For the Petitioner: Mr. Rajesh Kumar, Advocate
- For the State: Mr. Chandra Sen Prasad Singh, APP
- For the Bank (Respondent No. 2): Mr. Prabhakar Jha, Advocate; Mr. Amitesh Jha, Advocate
Nature of Case: Criminal revision against conviction and sentence under Section 409 IPC, affirming criminal appeal from trial court judgment.
Link to Judgment: Click here to read the full Patna High Court judgment
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