Introduction:

The Calcutta High Court in Arko Deep Saha @ Arkadeep Saha v. State of West Bengal & Anr., CRR 1892 of 2022, delivered a significant ruling clarifying the foundational requirements for offences under Sections 406 and 409 of the Indian Penal Code in the context of alleged financial irregularities under the Mahatma Gandhi National Rural Employment Guarantee Scheme. Justice Uday Kumar was considering a petition under Section 482 of the Code of Criminal Procedure seeking quashing of criminal proceedings arising out of Harishchandrapur P.S. Case No. 901 of 2017. The petitioner, a Skilled Technical Person engaged in the concerned Gram Panchayat, had been implicated in an alleged large scale siphoning of public funds relating to horticulture and land development projects. The prosecution alleged that although substantial funds were withdrawn under the scheme, no physical work had been executed, resulting in so called “ghost works.” While primary allegations centered on the Gram Pradhan, Supervisor and Gram Rojgar Sevak, the petitioner was accused of facilitating the fraud through technical silence and failure to report irregularities. The High Court was therefore called upon to determine whether mere designation and alleged inaction could attract criminal liability under Sections 406 and 409 IPC absent proof of entrustment, dominion over funds or a document linked overt act.

Arguments of the Petitioner:

The petitioner contended that the prosecution case was fundamentally flawed both legally and factually. It was submitted that the projects in question were sanctioned and funds substantially disbursed during 2015, whereas the petitioner’s engagement as Skilled Technical Person commenced only in late 2016. This chronological mismatch, described as a case of temporal impossibility, demonstrated that the alleged siphoning had already reached its financial culmination before he assumed charge. The petitioner emphasized that the essence of an offence under Section 409 IPC is entrustment of property coupled with dominion over it. He argued that he neither handled any funds nor possessed authority to disburse or control financial transactions. The scheme operated through a Direct Benefit Transfer mechanism under the supervision of designated financial authorities, leaving him without any fiscal dominion. It was further argued that he had not signed Measurement Books, valuation reports, work completion certificates or any technical documents which could have triggered release of funds. The absence of his signatures or formal endorsements on record demonstrated that he was bypassed in the financial decision making process. The petitioner asserted that criminal liability cannot be constructed on a nexus of designation alone. Mere technical oversight or failure to raise objections, even if assumed, could at best invite departmental scrutiny but not prosecution for criminal breach of trust. He contended that the prosecution’s theory of tacit conspiracy was speculative and unsupported by material evidencing a meeting of minds. Invoking principles laid down by the Supreme Court of India in State of Haryana v. Bhajan Lal and Sushil Sethi v. State of Arunachal Pradesh, the petitioner argued that continuation of proceedings in the absence of basic ingredients of the offence would amount to abuse of process of law.

Arguments of the State:

The State opposed the petition and maintained that the petitioner, as a technical functionary attached to the Gram Panchayat, had a duty to inspect works and ensure their proper execution. It was argued that his silence in the face of irregularities amounted to willful blindness and tacit collusion with the primary accused. According to the prosecution, the fraud could not have succeeded without at least passive cooperation from technical personnel responsible for oversight. The State contended that entrustment need not be confined to physical handling of funds but could extend to supervisory authority connected with execution of works funded under the scheme. It was further submitted that issues relating to degree of involvement and intention should be tested during trial and not adjudicated at the stage of quashing. The prosecution maintained that sufficient material existed to raise a triable issue regarding conspiracy and that the High Court should not short circuit the criminal process prematurely.

Court’s Judgment:

Justice Uday Kumar undertook a meticulous examination of the statutory ingredients of Sections 406 and 409 IPC. The Court emphasized that entrustment is the lifeblood of an offence under Section 409 IPC and that dominion over property is an indispensable prerequisite. Without proof that the accused was entrusted with property or exercised control over its disposition, the charge of criminal breach of trust cannot stand. The Court identified what it termed a significant dominion gap in the prosecution case. While the petitioner may have had technical oversight responsibilities, there was no evidence that he controlled or managed the flow of funds which were disbursed through a Direct Benefit Transfer mechanism governed by separate authorities. The absence of his signatures on Measurement Books and valuation documents reinforced the conclusion that he was not a decision maker in financial transactions. The Court observed that if disbursing authorities chose to bypass the technical layer altogether, the technical officer could not be criminally blamed for financial outcomes. On the aspect of conspiracy, the Bench found no material demonstrating a meeting of minds between the petitioner and the principal accused. The temporal sequence further weakened the prosecution theory since the alleged siphoning had occurred before the petitioner assumed his role. The Court distinguished administrative negligence from criminal intent, clarifying that failure to act as a whistle blower may attract departmental consequences but does not automatically satisfy the threshold of mens rea required for criminal prosecution. Relying on the Bhajan Lal principles, the Court held that forcing the petitioner to face trial despite absence of foundational ingredients would amount to abuse of process. It underscored that criminal law cannot be invoked on a mere nexus of designation without a nexus of deed. Accordingly, the High Court quashed the FIR and charge sheet insofar as they related to the petitioner, discharged him from bail bonds, and left it open to the department to initiate disciplinary proceedings if warranted, while directing the trial to continue against the remaining accused.