He reported the fraud himself. The state still kept him in jail.

One Crore, One MTS, and a Supervisor Who Says He Blew the Whistle

When Ajeet Kumar walked into the Sub Treasury at Dharmari, Reasi, every morning, he was the Assistant Treasury Officer — the man whose credential code could authorise a payment. Between May 2023 and March 2024, someone used that code, and the codes of two other officers, to siphon Rs.1,38,17,971 from the Union Territory exchequer. The money went into the personal accounts of an MTS official named Ali Hussain Shah, and from there to beneficiaries across India. Kumar was arrested on 14 March 2024. He has been in custody ever since. The question before the High Court of Jammu & Kashmir and Ladakh at Jammu was not whether he was guilty — that is for trial — but whether a man who says he himself reported the fraud should remain behind bars while he waits.

The Fraud That Unfolded Inside a Treasury

The story begins with a complaint from the District Treasury Officer, Reasi, on 6 March 2024. FIR No. 19/2024 was registered at Police Station Arnas under Section 409 IPC — criminal breach of trust by a public servant. Five days later, the investigation was transferred to the Economic Offences Wing of the Crime Branch Jammu. By 14 March, both Kumar and the co-accused MTS official were in custody.

The prosecution's case was stark. Between May 2023 and March 2024, the MTS official allegedly manipulated the treasury system using the credential codes of three officers — Kumar among them — to create fake bills and vouchers. The money was credited to Shah's personal accounts and then transferred to various beneficiaries across the country. The total misappropriation: Rs.1,38,17,971.

Kumar's defence was equally stark. He claimed he himself noticed the irregularity and reported it to his superiors. He was, he argued, a mere supervisory officer who had trusted his subordinates. No money had been traced to him. He had no criminal antecedents. He had cooperated with the investigation. The chargesheet had been filed. Why should he continue to rot in jail?

The prosecution saw it differently. Kumar, they said, was an active conspirator. He had delegated his credential code. He had failed to audit the accounts despite the ongoing fraud. The gravity of the offence — a crore-plus siphoned from the public exchequer — demanded that he remain in custody.

The Two Bail Applications That Failed

Kumar first approached the Chief Judicial Magistrate, Reasi, on 2 May 2024. His bail during investigation was dismissed. He tried again on 5 July 2024, this time seeking default bail. That too was rejected. By the time he reached the High Court, the chargesheet had been filed. The investigation was complete. The only question was whether continued detention was justified.

What Each Side Argued

Before Justice Mohd. Yousuf Wani, Kumar's counsel made a simple point: the offences under which he was charged — Sections 409, 420, 467, 468, 471, 477-A, and 120-B IPC — did not carry the death penalty. Life imprisonment was the maximum, but it was not an alternative to death. This distinction, they argued, was critical. Under Section 480 BNSS (the new code), the bar on bail applies only to offences that carry death or life imprisonment in the alternative. Where life imprisonment is the only possible sentence, the bar does not apply.

The prosecution countered with a familiar argument: the heinousness of the offence. A crore-plus of public money had been stolen. White-collar crimes require premeditation, unlike crimes of passion. They cited Mohd Isaq Bhat v. Central Bureau of Investigation (Bail App No. 131/2024, J&K HC, decided 03.07.2024), where this very court had held that in corruption and economic offences, premature release risks witness tampering.

But the Court was not persuaded. Justice Wani distinguished Mohd Isaq Bhat on its facts. That case, he noted, involved different circumstances. Here, the investigation was complete. The chargesheet had been filed. The petitioner had cooperated. There was no allegation that he had tampered with evidence or threatened witnesses while on interim bail.

The Doctrine That Mattered: When Does Section 480 BNSS Bar Bail?

This is the heart of the judgment. Section 480 BNSS imposes restrictions on bail for certain offences. But the key question is: which offences?

The Court held that the bar applies only to offences carrying death or life imprisonment in the alternative — meaning the statute gives the court a choice between sentencing the accused to death or to life imprisonment. Where life imprisonment is the only possible sentence (disjunctive of death), the bar does not apply.

Every single offence Kumar was charged with — criminal breach of trust by a public servant, cheating, forgery, falsification of accounts, criminal conspiracy — carries life imprisonment as the maximum, but none carries it as an alternative to death. The bar under Section 480 BNSS, therefore, did not apply.

THE PLAY: When arguing bail for an accused charged with multiple IPC offences, check each provision individually. If none carries death or life imprisonment in the alternative, the Section 480 BNSS bar does not apply. Bail becomes the rule, not the exception.

The Witness Rule the Supreme Court Has Repeated for 50 Years

Justice Wani did not stop at the statutory bar. He went through the entire edifice of bail jurisprudence. State of Rajasthan v. Balchand (AIR 1977 SC 2447) established the foundational principle: bail is the rule, jail is the exception. Gur Bakash Singh Sibbia v. State of Punjab (AIR 1980 SC 1632) reminded courts that no single circumstance has universal validity for granting or refusing bail. Sanjay Chandra v. CBI ((2012) 1 SCC 40) held that the object of bail is to secure the accused's appearance, not to punish. Deprivation of liberty before conviction is itself a form of punishment.

The Court also relied on Dataram Singh v. State of UP ((2018) 3 SCC 22), which held that if an accused was not arrested during the investigation, a strong case must be made for judicial custody after the chargesheet. And Pankaj Jain v. Union of India ((2018) 5 SCC 743) reinforced that the heinousness of the crime alone cannot deny bail if other overwhelming circumstances justify its grant.

The thread running through all these cases is Article 21 of the Constitution. The right to life and personal liberty is not a reward for good behaviour. It is a fundamental right that can be curtailed only when the state demonstrates a specific, compelling reason — flight risk, witness tampering, obstruction of justice — not merely the gravity of the accusation.

Why the Court Granted Bail

The Court found that the investigation was complete. The chargesheet had been filed. The petitioner had cooperated throughout. There was no evidence that he would flee or tamper with witnesses. The money trail, if any, did not lead to him. And critically, the bar under Section 480 BNSS did not apply.

Justice Wani also made an observation that will resonate in every treasury fraud case: a superior officer with the power to finally vouch a document is not supposed to be a watcher for subordinate officials in whom equal trust and responsibility is reposed. This is not a finding of innocence — that is for trial — but it is a recognition that supervisory liability cannot be presumed from the mere fact of fraud.

What This Means for Practitioners

Three things.

First, the distinction between life imprisonment as an alternative to death and life imprisonment as a standalone punishment is now squarely settled for bail purposes under the BNSS. If your client is charged under Sections 409, 420, 467, 468, 471, 477-A, or 120-B IPC, the Section 480 BNSS bar does not apply. Argue it early. Argue it clearly.

Second, post-chargesheet custody requires a specific justification. The prosecution cannot simply say "the offence is serious." It must show that the accused is likely to flee, tamper with evidence, or obstruct the trial. If the investigation is complete and the accused has cooperated, the burden shifts.

Third, the Mohd Isaq Bhat line of authority — which treats white-collar offences as inherently requiring pre-trial detention — has been significantly qualified. It is not a blanket rule. Each case turns on its facts.

The Bottom Line

If your client is charged with economic offences where life imprisonment is not an alternative to death, and the investigation is complete, and there is no specific evidence of flight risk or witness tampering, the High Court will grant bail. The rule remains: bail, not jail.

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