Punjab & Haryana High Court Refuses Anticipatory Bail in ₹65 Lakh Payroll Fraud, Holds Settlement Does Not Erase Criminal Breach of Trust Holds Economic Offences Affect Financial Integrity, Not Just Private Rights
Case Name: Ashish Kumar v. State of Haryana
Date of Judgment: 03 July 2026
Citation: CRM-M-31787-2026
Bench: Justice Sumeet Goel
Held: The Punjab and Haryana High Court held that a private settlement and partial repayment of the alleged misappropriated amount do not entitle an accused to anticipatory bail in cases involving serious economic offences. The Court observed that allegations of manipulating payroll records, creating fictitious employee entries and siphoning company funds amount to criminal breach of trust and cannot be reduced to a mere monetary dispute simply because the parties entered into a settlement.
The Court further held that economic offences affecting the financial integrity of institutions are grave in nature and require a thorough investigation. Where custodial interrogation is necessary to trace the money trail, identify beneficiaries, recover documentary evidence and unravel the full extent of the conspiracy, the extraordinary relief of anticipatory bail ought not to be granted.
Summary: The petitioner approached the Punjab and Haryana High Court under Section 482 of the Bharatiya Nagarik Suraksha Sanhita, 2023, seeking anticipatory bail in an FIR registered under Section 408 of the Indian Penal Code, corresponding to Section 316(4) of the Bharatiya Nyaya Sanhita, 2023.
According to the complainant, who served as the Audit Manager of Javi Systems India Pvt. Ltd., the petitioner was employed with the company between June 2018 and 2022 and was entrusted with responsibilities relating to payroll management and financial processes. It was alleged that by exploiting his access to the payroll system, the petitioner created fictitious employee records and diverted salary payments into bank accounts belonging to himself, his relatives and other associates.
The alleged fraud surfaced during an internal audit conducted in 2025. Verification of payroll records, bank statements and digital data allegedly revealed suspicious financial transactions, leading to the registration of the FIR. The investigation further disclosed that several beneficiary accounts were linked to persons residing in Panipat, Haryana, and that the company had allegedly suffered a wrongful loss of ₹65,18,941.
The prosecution also asserted that after the discrepancies came to light, the petitioner acknowledged his liability and entered into a settlement with the company, pursuant to which an earlier complaint was withdrawn. Although the petitioner initially made certain payments under the settlement, he allegedly failed to honour the repayment schedule, leaving an outstanding liability of approximately ₹57.98 lakh.
Seeking anticipatory bail, the petitioner contended that the allegations were false and exaggerated and that the dispute was essentially civil in nature, arising out of a repayment arrangement between the parties. He argued that the prosecution case was based entirely on documentary and electronic evidence already available with the investigating agency, making custodial interrogation unnecessary. The petitioner also expressed his willingness to cooperate with the investigation and comply with all conditions imposed by the Court.
The State and the complainant opposed the plea, submitting that the petitioner had deliberately manipulated payroll records and diverted company funds through fabricated employee entries. They argued that the settlement could not dilute the criminality of the allegations and that custodial interrogation remained essential to trace the money trail, identify all beneficiaries and recover relevant evidence.
The High Court observed that the allegations were neither vague nor unsupported. The material placed before the Court prima facie indicated misuse of the company’s payroll system to siphon funds into accounts connected with the petitioner and his associates. The Court held that the subsequent settlement and partial repayment did not alter the nature of the accusations, which involved manipulation of company records and unauthorised transfer of company funds rather than a mere contractual or financial dispute.
The Court further observed that economic offences are committed with deliberate design and have a serious impact on commercial institutions and public confidence. Since the investigation was still at a nascent stage, custodial interrogation was considered necessary for tracing the financial trail, identifying other beneficiaries and uncovering the complete conspiracy.
Relying upon the Supreme Court’s decision in State v. Anil Sharma (1997) 7 SCC 187, the Court reiterated that custodial interrogation is often indispensable for an effective investigation and that anticipatory bail should not impede the discovery of concealed evidence in serious economic offences.
Decision: The Punjab and Haryana High Court dismissed the anticipatory bail petition, holding that the petitioner had failed to establish any exceptional circumstance warranting the exercise of the Court’s extraordinary discretionary jurisdiction.
The Court concluded that, considering the seriousness of the allegations, the substantial amount allegedly misappropriated, the ongoing investigation and the necessity of custodial interrogation to trace the money trail and uncover the alleged conspiracy, the petitioner was not entitled to the concession of anticipatory bail.