TMI Blog1952 (11) TMI 10X X X X Extracts X X X X X X X X Extracts X X X X ..... her persons as his co-accused by the Special Magistrate of Trichur, who made an order of acquittal in favour of all of them. The State Government preferred an appeal to the High Court challenging the propriety of the entire order. The High Court dismissed the appeal so far as it related to accused Nos. 2 and 3 and reversed the judgment of the original court in regard to accused No. 1, who is the sole appellant before us. 3. The material facts necessary for purposes of the present appeal may be briefly narrated as follows. The appellant and accused No. 2 Ramachandra Iyer were appointed joint receivers of a textile business, known as Sitaram Spinning and Weaving Mills Limited (hereinafter referred to as the mills), situated at Trichur, under an order of the High Court of Cochin passed in O. S. No. 2 of 1123 M.E. The order of appointment was made on 13-2-1948 and it conferred on the receivers all powers of management according to the Articles of Association of the mills. They were to keep regular accounts and submit monthly statements of receipts and disbursements on the 10th day of every English calendar month. Shortly before the date that this order was passed, the control on tex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ok delivery of the goods. The further case of the prosecution is that on being informed that the remaining 50 bales were ready at the mills, he met the first accused at his house on the night of 11-5-1948. There he was told that the extra amount, which he was to pay to accused No. 1, would be ₹ 23,100 in all, the calculation being made on the basis of 26 per cent. of the price for the first allotment of 50 bales and 50 per cent. for the second. Deducting the sum of ₹ 9,000 already paid by P. W. 1, he was asked to pay the balance amounting to ₹ 14,100. P. W. 1 prayed for a little time, but as the accused refused to give him any, he eventually executed a promissory note for a sum of ₹ 15,000 in favour of one P. Namboodiri, a nominee of the appellant who has been examined as prosecution witness No. 8 in this case. As the amount payable by P. W. 1 was ₹ 14,100 whereas the handnote was executed for ₹ 15,000, the appellant paid to P. W. 1 a sum of ₹ 900 in cash. P. W. 1 then went to the mills accompanied by the first accused and arranged to take delivery of the goods. As 49 bales were only available, an invoice was obtained for the same, beari ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filed by the Divisional Inspector of Police before the District Magistrate against the three accused, the first two, as stated already, being the two joint receivers of the mills and the third a nephew of the first accused, who was alleged to have aided and abetted the other two in the commission of the offence. The charges were under the sections of the Cochin Penal Code relating to acceptance of illegal gratification (Section 147 corresponding to Section 161, Indian Penal Code) and criminal breach of trust (Section 389 corresponding to Section 409, Indian Penal Code) and also for abetment of and entering into conspiracy for commission of these offences. 5. The trial commenced in the court of the District Magistrate, Trichur; but after P. W. 1 was examined in part, the case was transferred for disposal to the First Class Special Magistrate of that place. Altogether 37 witnesses were examined by the prosecution. It appears that the Special Public Prosecutor, who represented the State Government, gave up, at the time of trial, the case of receipt of illegal gratification by the accused as public servants, and the charge that was framed by the trying Magistrate at his instance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... him in his evidence. It was more probable, according to the Magistrate, that the handnote was executed by P. W. 1 as he was put in possession of funds by the first accused with a view to enable him to purchase the goods as per invoice (Ex. D). In the opinion of the Magistrate, there was no substance in the case of the prosecution that the mills suffered any wrongful loss by reason of stamping cloth produced in May with April prices. Lastly, the Magistrate held that even assuming that ₹ 23,100 was paid by P. W. 1, such payment might amount to an offence of taking illegal gratification but not to one of criminal breach of trust. The result was that by his judgment dated 26-5-1949 the trying Magistrate acquitted all the accused. 7. An appeal was taken against this decision by the State Government to the High Court of Travancore-Cochin. The learned Judges of the High Court while confirming the acquittal of the second and the third accused, reversed the judgment of the trial court so far as it related to the first accused. In the view taken by the High Court, as the receivers had absolute and unfettered discretion regarding the quantity of goods which they might allot to pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 342, Indian Criminal P. C). The other contention of Mr. Nambiar is that even if the story told by P. W. 1 is accepted in its entirety, the offence committed by the appellant could not constitute criminal breach of trust, as defined in Section 385, Cochin Penal Code, though it might amount to taking of illegal gratification--an offence punishable under Section 147 of the said Code. 9. As regards the first point, it will be seen that there are really three questions of fact which require determination in this case, and with regard to all of them the decision of the trial court was in favour of the accused. The first question is, whether the story of P. W. 1 regarding the payment of ₹ 9,000 to the appellant on 24-4-1948 is true? The second is, whether the promissory note (Ex. C), the execution of which is not disputed, was executed in the circumstances alleged by P. W. 1? The third and the subsidiary question which arises on the charge framed in this case is, whether the mill suffered loss by reason of the fact that certain bales of May cloth were stamped with April prices in connection with the delivery of 49 bales to P. W. 1 in May 1948? 10. As regards the pay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e premium or bribe, according to P. W. 1, was calculated on the basis of 26 per cent. of the price of the first allotment and 50 per cent. of the second. On this calculation the total amount would be more than ₹ 23,100. Then again if the balance payable by P. W. 1 was ₹ 14,100, no conceivable reason could be assigned for P. W. 1's giving a pro-note for ₹ 15,000 at the same time taking back ₹ 900 in cash from the accused. In the letters (Exs. H and J), which P. W. 1 admittedly wrote to the appellant and P. W. 8 respectively, he requested the addressees to return to him the pro-note and expressed his readiness to pay a further sum of ₹ 1,000 to make up the total amount of ₹ 10,000 which was all that he promised to pay to the first accused. If he had already received ₹ 900 in cash from the first accused, he was certainly liable to pay back that sum as well and the amount payable by him in that event would be ₹ 1,900 and not ₹ 1,000. 12. The case of the accused in respect of the pro-note Was that the transaction represented a genuine loan advanced to P. W. 1 out of the money belonging to P. W. 8 who was a close relation of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g stamped with April prices; and the conclusion reached by him is that no loss was suffered by the mills on this score at all and this fact was not even relevant for purposes of the present case. Ex. A(m), which is the order alleged to be initialled by the appellant, directed that 25 bales of May cloth should be stamped with April seal and 25 bales of April cloth with May seal. The Magistrate has pointed out that the mills had to produce a certain quota of cloth every month. Owing to scarcity of water certain bales of cloth produced in April could not be bleached in time. To meet the necessities, the receivers had to take the unbleached May quota for distribution to the April quota-holders by affixing April seals. According to the Special Magistrate the order Ex. A(m) was passed in course of routine business and there was no dishonest intention behind it. Undoubtedly the May prices were higher, but as an equal quantity of April cloth was stamped with May seal, the mills could not possibly suffer any loss. Moreover, the charge framed in the case did not specify what loss, if any, was sustained by the mills by reason of such stamping and the entire loss alleged by the prosecution ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 is not the sole owner of his shop and has other partners? 16. In paragraph 13 of the judgment the learned Judges began by saying that the promissory note (Ex. C) furnishes a very strong and circumstantial evidence in support of this evidence given by P. W. 1. The point is elaborated in the passages that follow. It is pointed out, first of all, that the promissory note does not mention any cash consideration. It is stated next that it is difficult to believe that the first accused became so magnanimous in his dealings with P. W. 1 that he not only gave him more than double his original allotment but further advanced him money in order to enable him to make his purchase. The third point mentioned is, that it is not proved that the first accused had with him money belonging to P. W. 8. Even if he had any, the evidence of P. W. 8 would suggest that his consent was taken to the advancing of loan after the pro-note was executed. The learned Judges observe further that it is unbelievable that if the first accused was dealing with money belonging to a relation of his, he would be contented with taking a bare promissory note from P. W. 1 unaccompanied by any security and that too ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Magistrate which 'prima facie' are favourable to the accused. The first court relied on a vital defect in the evidence of P. W. 1 when he said that the promissory note was executed at night and delivery of goods was taken after that. The High Court has not referred to this evidence at all; nor did it consider as to how far the statement of P. W. 1 that the accused paid him in cash a sum of ₹ 900 simultaneously with the execution of the handnote is contradicted by his own statement contained in his letters (Exs. H and J). As regards the reason for his taking a loan, the trial court laid stress on the fact that in his own evidence P. W. 1 could not state clearly as to how he was able to secure ₹ 33,000 and odd which was necessary for making the purchase. The High Court did not consider this aspect of the case, but contented itself with observing in a most general way that there is evidence to show that P. W. 1 had abundant funds in his hand. 18. The only other thing upon which the learned Judges lay great stress as furnishing strong support to the story of P. W. 1 is the evidence of the Anchal Master (P. W. 10) which proves, according to the learned Judges, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed upon implicitly, and we cannot rule out the possibility of his creating self- serving evidence in the shape of these two letters (Exs. H and J). The subsequent letter (Ex. K) could very well be a part of the same scheme. 19. As regards the finding of the High Court, that in giving direction to stamp May cloth with April prices, the first accused acted in contravention of the duty imposed upon him not to do acts which are detrimental to the interests of the mills and consequently was guilty of criminal breach of trust, we think the reasons given by the learned Judges to be wholly unsatisfactory. The learned Judges altogether overlooked that the charge of criminal breach of trust framed against the accused was in respect of a sum of ₹ 23,100 only, and that the loss alleged to have been sustained by the mills by reason of stamping May cloth with April prices was not an item included in this amount. The learned Judges also overlooked the contents of the order, Ex. A(m), by which direction for such stamping was given. That exhibit clearly shows that the same quantity of May cloth was directed to be stamped with April prices. As the prices in May were higher than those in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f criminal breach of trust? As laid down in Section 385, Cochin Penal Code, (corresponding to Section 405, Indian Penal Code) to constitute an offence of criminal breach of trust it is essential that the prosecution must prove first of all that the accused was entrusted with some property or with any dominion or power over it. It has to be established further that in respect of the property so entrusted, there was dishonest misappropriation or dishonest conversion or dishonest use or disposal in violation of a direction of law or legal contract, by the accused himself or by someone else which he willingly suffered to do. It follows almost axiomatically from this definition that the ownership or beneficial interest in the property in respect of which criminal breach of trust is alleged to have been committed, must be in some person other than the accused and the latter must hold it on account of some person or in some way for his benefit. In the case before us, it is not disputed that if the sum of ₹ 23,100 was paid by P. W. 1 to the appellant by way of illegal gratification to induce the latter to make an allotment of cloth in his favour, there could be no question of entr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... illegal gratification to the accused. While giving his deposition in court, P. W. 1 stated in his examination-in- chief: Accused No. 1 told me I shall give you 100 bales and you must give me ₹ 10,000 over and above the price. This also leaves no doubt that the money was intended for the accused personally. After the charge was framed, the witness was cross-examined and then he began to prevaricate to some extent. I do not know he said, What this additional amount was intended for. Whether it was received as illegal gratification or on behalf of the mill is also not known. But this was said with a purpose and it clearly contradicts his earlier statements referred to above. It seems to us to be perfectly clear that P. W. 1 was under no misapprehension regarding the nature of the payment which he made and the learned Judges of the High Court in paragraph 16 of their judgment express their opinion that it was the belief of P. W. 1 that the money was paid as bribe or illegal gratification and because he was afraid that criminal liability might attach to him also, that is the reason why he delayed in making an entry in the account books. Quite at variance with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l products at the current price. The revised rates, which the receivers recommended should be introduced from 1-5-1948, were sanctioned by the court by its order. Ex. CB-1. It is not a fact that the receivers could charge any prices they liked. The prices were all stamped on the cloths and the invoices (Exs. B and D) show that P. W. 1 was charged the stamped prices only. 23. The learned Advocate-General appearing for the State Government saw the difficulty in the way of establishing that there was any entrustment with the accused in respect of the sum of ₹ 23,100 paid to him by P. W. 1. He tried to get round this difficulty by saying that it could be held on the facts of this case that the entrustment with the accused was in respect of the goods of the mills and the criminal breach of trust consisted in disposing of the goods contrary to the directions of the court and misappropriating the sale proceeds. It is not necessary to enter into the merits of this argument for the simple reason that this was not the charge upon which the accused was tried. The subject of criminal breach of trust, as stated in the charge, was a sum of ₹ 23,100 and the definite allegatio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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