The Supreme Court has restored the acquittal of a former Telephone Department cashier accused of misappropriating telephone bill collections, holding that the prosecution failed to prove entrustment of the money, its dishonest misappropriation, or any dishonest intention on his part.

The Bench of Justices Ujjal Bhuyan and Atul S. Chandurkar set aside the Bombay High Court’s judgment convicting the employee under Section 409 of the Indian Penal Code and found that crucial financial records had not been produced, the alleged seizure of documents suffered from serious deficiencies, and the High Court had wrongly shifted the burden of proof onto the accused.

Buy Now: 90+ Supreme Court Judgments – September 2026

Ramkrushna Prahllad Dongardive was serving as a Cashier-cum-Counter Clerk with the Telephone Department at Aurangabad. According to the prosecution, he collected ₹8,73,737 from telephone subscribers between July 1 and October 9, 1993.

The department alleged that ₹3,88,035 was deposited into the Government’s account belatedly, amounting to temporary criminal breach of trust, while another ₹4,75,702 was not deposited.

Following a complaint by the Assistant Accounts Officer on October 11, 1993, offences under Sections 409, 477 and 420 IPC were registered. The employee was subsequently tried on a charge under Section 409 IPC.

The Chief Judicial Magistrate, Aurangabad, acquitted him on February 20, 2002, finding the prosecution evidence vague and insufficient. The Bombay High Court’s Aurangabad Bench reversed that acquittal on October 12, 2017, and sentenced him to one year’s rigorous imprisonment and a fine of ₹5,000.

The employee challenged the conviction before the Supreme Court.

The central issue was whether the material on record established the essential ingredients of criminal breach of trust and justified overturning the trial court’s acquittal.

Explaining the statutory framework, the Supreme Court observed that Section 405 IPC requires proof that property was entrusted to the accused, or that the accused had dominion over it, followed by dishonest misappropriation, conversion, use or disposal in the manner contemplated by the provision.

Section 409 deals with criminal breach of trust involving entrustment to specified categories of persons.

The Bench emphasised that dishonest intention is an essential ingredient. A breach of trust, by itself, does not constitute the criminal offence unless accompanied by dishonesty. Although temporary misappropriation can also attract criminal liability, the prosecution must establish the necessary ingredients through evidence.

The Court found that the prosecution had not produced the original cashbook, daily register, rough cashbook, audit report and other relevant records necessary to establish the alleged collections and subsequent failure to deposit them.

The initial investigating officer admitted that he had asked departmental officers to produce the original cashbook, audit report and documents concerning collection of money. Those records were not shown to him before his transfer.

According to the Supreme Court, these documents were fundamental to proving entrustment. They could have established the amounts received by the employee and whether those amounts were subsequently deposited, withheld or temporarily misappropriated.

Without them, the prosecution failed to establish the evidentiary chain underlying its allegations.

The employee had also sought production of the daily cash handover register and the stock register recording the supply of receipt books for the period from February 1 to October 5, 1993.

His defence was that the entire amount had been handed over to the Accounts Officer and that the registers would support his explanation.

The trial court noted that repeated applications had been made for the relevant departmental records, but the Telephone Department did not produce them. It drew an adverse inference under Section 114(g) of the Indian Evidence Act.

The Supreme Court upheld that approach. It rejected the High Court’s reasoning that the employee ought to have produced the daily registers if he had deposited the money or handed it over to the main cashier.

The records were in the department’s custody, and its failure to produce them could not be used to impose the prosecution’s burden on the accused.

The Court also examined a ten-page printed statement relied upon by the prosecution, containing telephone numbers and amounts shown as paid or unpaid.

The Assistant Accounts Officer admitted that the document neither bore the employee’s signature nor contained any handwritten portion attributable to him.

The Supreme Court found nothing connecting the employee with the figures recorded in that statement. It held that the High Court should not have relied on it to establish the alleged misappropriation.

The Bench explained that the position could have been different had the prosecution proved a complete chain showing receipt of money by the employee, followed by short deposit or non-deposit through the relevant daily deposit registers. That evidence was absent.

Another major component of the prosecution case was the alleged recovery of 46 documentary articles, including receipt books and copies of telephone bills, from the employee’s residence.

Both witnesses to the seizure failed to support the prosecution. One stated that police obtained his signatures when he visited the police station for his own work. The other stated that he was called while standing with his autorickshaw outside the police station and asked to sign documents.

The investigating officer admitted that he had not obtained the employee’s signature on the seizure panchnama and had not placed a date below his own signature.

The Supreme Court found serious infirmities in proving the seizure, together with non-compliance with Sections 100(4) and 100(7) of the criminal procedure law.

It rejected the High Court’s approach of accepting the seizure merely because there appeared to be no reason for the police officer to give false evidence. In the circumstances of this case, the prosecution had not adequately proved the recovery.

The Bench clarified that non-compliance with search and seizure requirements does not, by itself, invalidate a seizure or vitiate the prosecution.

However, such irregularities must be assessed alongside the remaining evidence and any prejudice caused to the accused.

Here, the seizure deficiencies operated together with missing financial records and other weaknesses in the prosecution case. Their cumulative effect supported the employee’s acquittal, particularly when the High Court was considering an appeal against an existing acquittal.

The Supreme Court found that the High Court had given undue importance to the employee’s alleged failure to explain documents said to have been recovered during investigation.

Relying on Rabindra Kumar Dey v. State of Orissa, the Bench reiterated that the prosecution must prove its case beyond reasonable doubt and cannot compensate for deficiencies in its evidence by relying on weaknesses in the defence.

An accused remains entitled to the presumption of innocence. A probable defence explanation capable of creating doubt in the prosecution’s version need not satisfy the same rigorous standard imposed on the prosecution.

The Court concluded that the High Court had erred in shifting the burden onto the employee.

The Bench identified an additional procedural defect: the High Court imposed a sentence without separately hearing the employee on the question of punishment after convicting him for the first time.

Referring to Mukesh Kumar Yadav v. The State (UT of Andaman & Nicobar Islands), the Supreme Court reiterated that an appellate court reversing an acquittal must hear the convicted person on sentence and itself impose the appropriate punishment.

The Court noted that this defect did not determine the outcome because the conviction itself was unsustainable on the evidence.

The Supreme Court held that entrustment had not been proved, the material was insufficient to establish misappropriation, and there was no evidence of dishonest intention.

It also found that the High Court failed to give adequate weight to the trial court’s assessment of witnesses and its opportunity to observe their demeanour.

The Bench set aside the High Court’s conviction and sentence, restored the trial court’s acquittal under Section 409 IPC, and cancelled the employee’s bail bonds.

Membership Required to Access Case Details & Order Copy

To view the complete Case Details and Download Order Copy, you must have an active membership. Please subscribe to continue.

Read More: Investors Not Named in Trust Deed: Supreme Court Rejects CBDT Appeal Against Tax Relief