Arrogating authority to sign cheques after demitting office raises an inference of mala fide for criminal cognizance.

The petitioners (an outgoing Mukhiya and a Panchayat Secretary) sought to quash an order dated 02.02.2017 passed by the A.C.J.M., Sherghati, taking cognizance of offences under Sections 409 and 420 of the Indian Penal Code.

The F.I.R. alleged they unauthorizedly withdrew ₹6,49,000/- from the 14th Finance Commission funds for solar light installation.

The petitioners argued the work was completed per Aam Sabha resolutions.

The prosecution highlighted that Petitioner No. 1 signed two cheques totaling over ₹9,00,000/- on 01.07.2016—two days after the newly elected Mukhiya had taken oath on 29.06.2016.

1. Whether the act of signing and issuing cheques from public funds by an outgoing Mukhiya after demitting office constitutes a prima facie case of criminal breach of trust and cheating.

2. Whether the completion of the underlying public work serves as a sufficient ground to quash a cognizance order when the financial transaction was unauthorized.

The Court applied Section 409 (Criminal breach of trust by public servant) and Section 420 (Cheating and dishonestly inducing delivery of property) of the Indian Penal Code.

The core legal principle applied is that the "arrogation of authority" to discharge financial duties after the cessation of legal tenure raises a rebuttable presumption of mala fide intent and collusion, necessitating a trial.

The Court observed that even if the solar lights were installed as per the spot enquiry report, this fact does not validate the unauthorized financial conduct of the petitioners.

The critical factor was the timeline: Petitioner No. 1 ceased to hold office on 29.06.2016, yet proceeded to issue cheques on 01.07.2016.

The Court reasoned that if the work was bona fide, the outgoing Mukhiya should have left the disbursement to the newly elected successor.

By bypassing this legal transition, the petitioners' actions created a reasonable inference of collusion. Since a prima facie case was established regarding the unauthorized exercise of power over public funds, the Court found no merit in exercising its inherent powers to quash the proceedings at the cognizance stage.

It held that the signing of cheques by a person no longer in office is sufficient to sustain an order of cognizance for criminal offences.

The Court directed that the proceedings before the learned Magistrate shall continue in accordance with the law.