Co-Accused Disclosures Labelling Employee As 'Mastermind' Not Substantive Evidence; S. 316(5) BNS Inapplicable To Company Servants: Punjab & Haryana High Court Grants Bail

"The description of the petitioner as the mastermind rests mainly on the disclosure statements recorded during investigation. It is well settled that the statement of a co-accused cannot by itself be treated as substantive evidence. The exact role of the petitioner will have to be established during the trial," Punjab & Haryana High Court.

CHANDIGARH — Holding that pre-trial parity cannot be defeated merely by labelling an employee as the mastermind on the strength of co-accused confessions, the Punjab and Haryana High Court on November 3, 2026, granted regular bail under Section 483 of the Bharatiya Nagarik Suraksha Sanhita, 2023 (BNSS) to a dairy processing operator. Justice Manisha Batra observed that Section 316(5) of the Bharatiya Nyaya Sanhita, 2023 (BNS), which prescribes up to life imprisonment, applies specifically to public servants, bankers, merchants, brokers, or agents, and does not automatically govern ordinary company employees whose cases fall under Section 316(4) of the BNS.

The prosecution arose out of an FIR registered at Police Station Taraori, Karnal, alleging that 9,110 kilograms of milk valued at approximately Rs. 7.68 lakh was dishonestly loaded into a tanker inside the premises of Modern Dairies Limited with the active connivance of the petitioner, who was working as the processing operator on duty. After initially securing bail from the trial court, the petitioner was re-arrested upon the subsequent addition of Section 316(5) of the BNS and allegations that his personal bank account reflected unexplained credits of nearly Rs. 45 lakh over two and a half years.

Whether an accused employee can be denied the benefit of bail on the premise of being the alleged mastermind when such imputation rests solely on co-accused disclosure statements?

Whether the aggravated penal provisions of Section 316(5) of the BNS apply to an ordinary employee of a commercial entity merely because the employer is an enterprise listed on a stock exchange?

Addressing the prosecution's contention that the petitioner was the principal orchestrator, the High Court emphasized that the tanker could not have entered or attempted to exit the dairy facility without the active involvement of the driver and security personnel, both of whom had already been enlarged on bail.

Statements of co-accused cannot constitute substantive evidence to refuse parity in bail

Justice Batra underscored that penal culpability must be established through admissible trial evidence rather than untested investigative admissions made by co-accused persons.

"The petitioner was an operator, whereas Ajay Kumar, who was granted bail by this Court on 18.09.2026, was only a helper who is stated to have acted on his asking. To that extent, the two stand on a different footing. At the same time, the tanker could neither have reached the milk tank nor have proceeded towards the gate without the driver Karamjit Singh, and the security guard Shenki Ram is alleged to have tried to let it pass. Both of them are on bail. The role of the petitioner is not so distinct that he alone must be kept in custody," the Court observed.

The Bench further held that reliance on disclosure statements to substantiate a higher degree of guilt at the bail stage is legally untenable.

"The description of the petitioner as the mastermind rests mainly on the disclosure statements recorded during investigation. It is well settled that the statement of a co-accused cannot by itself be treated as substantive evidence. The exact role of the petitioner will have to be established during the trial," the Bench recorded.

Section 316(5) BNS applies to agents and bankers, not ordinary corporate servants governed by Section 316(4) BNS

The Court meticulously distinguished between the statutory ambits of Section 316(4) and Section 316(5) of the BNS, remarking that corporate listing does not elevate a private employee into a public servant, agent, or merchant.

"Section 316(5) of BNS, which provides for imprisonment for life or for ten years, applies to a public servant, or to a banker, merchant, factor, broker, attorney or agent in the way of his business, whereas a clerk or servant is dealt with under Section 316(4) of BNS, which provides for imprisonment up to seven years. The petitioner is stated to be an employee of the company, and the fact that the company is listed on a stock exchange would not by itself change his position," Justice Batra noted.

Turning to the prosecution's reliance on financial records and land acquisitions, the Court noted that the FIR pertained to a single, isolated transaction, and the status report failed to substantiate any nexus between the bank deposits and any prior complaints of milk theft.

Unlinked financial transactions cannot warrant pre-trial custody once investigative records are seized

The Bench determined that since the relevant banking documents were already seized by the investigating agency and the final report stood filed, the petitioner's continued custody served no investigative purpose.

"The status report does not point out any specific link between these transactions and the theft of milk from the complainant company, and no other incident of theft or shortage of milk has been mentioned. Any such connection is a matter of evidence. The bank record is already with the investigating agency, and custody of the petitioner is not required for this purpose," the Court noted, further pointing out that the petitioner had undergone over seven months of incarceration without charges being framed.

The High Court accordingly allowed the petition and directed that the petitioner be released on regular bail upon furnishing personal and surety bonds before the trial court, subject to conditions restraining him from entering the premises of Modern Dairies Limited or contacting prosecution witnesses.

Date of Decision: November 3, 2026