TMI Blog1963 (3) TMI 57X X X X Extracts X X X X X X X X Extracts X X X X ..... ld be convenient to state briefly the case of the prosecution. One Lala Shankarlal, a political leader and Vice-President of the Forward Bloc and a highly competent commercial magnate, and his nominees held the controlling block of shares of the Tropical Insurance Company Limited, hereinafter called the Tropical , and he was the Chairman and Managing Director of the said company. He had also controlling voice in another company called the Delhi Swadeshi Cooperative Stores Ltd. The said Delhi Stores held a large number of shares of the Tropical. In or about the middle of 1948, Sardar Sardul Singh Caveeshar, who was controlling the People's Insurance Co. Ltd. and other concerns in Lahore, and Kaul, a practising barrister, came to Delhi. During that year the former was the President of the Forward Bloc and Shankarlal was its Vice-President. Shankerlal, Caveeshar and Kaul conceived the idea of purchasing the controlling block of 63,000 shares of the Jupiter Insurance Company Ltd., hereinafter referred to as the 'Jupiter , a prosperous company, in the name of the Tropical from the Khaitan Group which was holding the said Jupiter shares. But the financial position of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... businessman of Bombay, and (12) Bhagwan Swarup, the nephew of Shankarlal and a retired Assistant Commissioner of Income-tax of the Patiala State. After forming the conspiracy, the controlling shares of the Empire were purchased in the name of Damodar Swarup for an approximate sum of ₹ 43,00,000/-. For that purpose securities of the Jupiter of the value of ₹ 48,75,000/-were withdrawn by the Directors of the Jupiter without are-solution of the Board of Directors to that effect and endorsed in the name of Damodar Swarup again without any resolution of the Board of Directors to that effect. Damodar Swarup deposited the said securities in the Punjab National Bank Ltd., and opened a Cash-credit account in the said Bank in his own name. He also executed two promissory notes to the said Bank for a sum of ₹ 10,00,000/- and ₹ 43,00,000/- respectively. Having opened the said account, Damodar Swarup drew from the said account by means of cheques a sum of ₹ 43,00,000/- and paid the same towards the purchase of the said Empire shares. Out of the said shares of the Empire, qualifying shares of twenty were transferred in each of the names of Damodar Swa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o suffer rigorous imprisonment for a further period of six months. He acquitted accused 3, 7, 8 and 9. The State preferred an appeal to the High Court against that part of the- ..judgment of the learned Sessions judge acquitting some of the accused; and the convicted accused filed appeals against their convictions. The appeal filed by Caveeshar, Accused-6, was dismissed in limine by the High Court. The appeals filed by the other convicted accused against their convictions were dismissed and the appeal by the State against the acquittal of some of the accused was allowed by the High Court. Accused-7 was sentenced to 5 years rigorous imprisonment, accused-8 to 3 years rigorous imprisonment and accused 9 to 3 years rigorous imprisonment. Accused 6, 7, 8, 9 and 10 have, by special leave, preferred these appeals against their convictions and sentences. We are not concerned with the other accused as some of them died and others did not choose to file appeals. At the outset it may be stated that none of the learned counsel appearing for the accused questioned the factum of conspiracy; nor did they canvass the correctness of the findings of the Courts below that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rchase of 54,000 shares of the Tropical for ₹ 14,00,000/- on May 25, 1949 and December 20, 1949. These four ficticious transaction were brought about to show the discharge of the loan advanced to Caveeshar, Accused-6. Further manipulations were made in the accounts showing that parts of the loans due from Raghavji, Misri Devi and Caveeshar and also the price of the Tropical shares were paid by Caveeshar. These paper entries did not satisfy the auditors and they insisted upon further scrutiny. It is the case of the prosecution that Shankarlal and his co-conspirators following their usual pattern conceived the idea of getting the controlling interest of the Empire, which had a reserve of ₹ 9 crores. Jupiter securities worth about ₹ 45,00,000/- were endorsed in favour of Accused-7, who in his turn endorsed them in favour of the Punjab National Bank Ltd., for the purpose of opening a cash-credit account therein. On October 5, 1950, under Ex. Z-9, the controlling shares of the Empire were purchased from Ramsharan Group and the consideration therefor was paid from and out of the money raised on the Jupiter securities. The Directors of the Jupiter had to make good to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the Jupiter coffers to cover up the loss caused to it by their fraud. Therefore in these appeals we proceed on the basis that there was a conspiracy as aforesaid and the only question for consideration is whether all or some of the appellants were parties to it. Before dealing with the individual cases, as some argument was made in regard to the nature of the evidence that should be adduced to sustain the case of conspiracy, it will be convenient to make at this stage some observations thereon. Section 120-A of the Indian Penal Code defines the offence of criminal conspiracy thus When two or more persons agree to do, or cause to be done an illegal act, or an act which is not illegal by illegal means, such an agreement is designated a criminal conspiracy. The essence of conspiracy is, therefore, that there should be an agreement between persons to do one or other of the acts described in the section. The said agreement may be proved by direct evidence or may be inferred from acts and conduct of the parties. There is no difference between the mode of proof of the offence of conspiracy and that of any other offence: it can be established by direct evidence or by circu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce of the conspiracy as for the purpose of showing that any such person was a party to it. It can only be used for the purpose of proving the existence of the conspiracy or that the other person was a party to it. It cannot be used in favour of the other party or for the purpose of showing that such a person was not a party to the conspiracy. In short, the section can be analysed as follows: (1) There shall be a prima facie evidence affording a reasonable ground for a Court to believe that two or more persons are members of a conspiracy; (2) if the said condition is fulfilled, anything said, done or written by any one of them in reference to their common intention will be evidence against the other; (3) anything said, done or written by him should have been said, done or written by him after the intention was formed by any one of them; (4) it would also be relevant for the said purpose against another who entered the conspiracy whether it was said, done or written before he entered the conspiracy or after he left it ; and (5) it can only be used against a co-conspirator and not in his favour; With this background let us now take the evidence against each of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... over up the fraud committed in respect of the Jupiter. Therefore., it may be that the defalcations made in Jupiter may afford a motive for the new conspiracy, but the two offences are distinct ones. Some accused may be common to both of them some of the facts proved to establish the Jupiter conspiracy may also have to be proved to support the motive for the second conspiracy. The question is whether that in itself would be sufficient to make the two conspiracies the one and the same offence. Learned counsel suggests that the question raised involves the interpretation of a provision of the Constitution and therefore the appeal of this accused will have to be referred to a Bench consisting of not less than 5 judges. Under Art. 145 (3) of the Constitution only a case involving a substantial question of law as to the interpretation of the Constitution shall be heard by a Bench comprising not less than 5 Judges. This Court held in State of Jammu Kashmir v. Thakur Ganga Singh [1960] 2 S.C.R.346., that a substantial question of interpretation of a provision of the Constitution cannot arise when the law on the subject has been finally and effectively decided by this Court. Two decisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion. As the question raised has already been decided by this Court, what remains is only the application of the principle laid down to the facts of the present case. cannot, therefore, hold that the question raised involves a substantial question of law as to the interpretation of the Constitution within the meaning of Art. 145 (3) of the Constitution. In the present case, applying the test laid down by this Court, the two conspiracies are not the same offence: the Jupiter conspiracy came to an end when its funds were misappropriated. The Empire conspiracy was hatched subsequently, though its Object had an intimate connection with the Jupiter in that the fraud of the Empire was conceived and executed to cover up the fraud of the Jupiter. The two conspiracies are distinct offences. It cannot even be said that some of the ingredients of both the conspiracies are the same. The facts constituting the Jupiter conspiracy are not the ingredients of the offence of the Empire conspiracy,, but only afford a motive for the latter offence. Motive is not an ingredient of an offence. The proof of motive helps a Court in coming to a correct conclusion when there is no direct evidence. Whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed on him and sentence him to undergo rigorous imprisonment for 3 years. Subject to the aforesaid modification, the appeal preferred by Caveeshar, Accused-6, is dismissed. We shall now proceed to consider the appeal preferred by Damodar Swarup, Accused-7 i. e., Criminal Appeal No. 83 of 1962. Accused-7 was the Managing Director and Chairman of the Empire during the period of the conspiracy. On October 17, 1950 he was elected the Chairman of the Board of Directors of the Empire and appointed as Managing Director on a salary of ₹ 2,000/per month for a period of one year. He was removed from the post of Managing Director at the meeting of the Board of Directors held on March 12, 1951. The misappropriation of the funds of the Empire, which is the subject-matter of the conspiracy, were committed during the period of his Managing Directorship i. e., between September 20 and December 31, 1950. The prosecution case is that Accused-7 was a party to the conspiracy, whereas the defence version is that he was a benamidar for Shankarlal, that he took part in the proceedings of the Board of Directors bona fide, believing that there was nothing wrong, that the resolutions were implemente ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not only upon the witness s perspicacity but also on his opportunities to observe the person as well as the said person s cleverness to hide his real traits. But a disposition of a man may be made up of many traits, some good and some bad, and only evidence in regard to a particular trait with which the witness is familiar would be of some use. Wigmore puts the proposition in the following manner: Whether, when admitted, it should be given weight except in a doubtful case, or whether it may suffice of itself to create a doubt, is a mere question of the weight of evidence, with which the rules of admissibility have no concerned But, in any case, the character evidence is a very weak evidence : it cannot outweigh the positive evidence in regard to the guilt of a person. It may be useful in doubtful cases to tilt the balance in favour of the accused or it may also afford a background for appreciating his reactions in a given situation. It must give place to acceptable positive evidence. The opinion expressed by the witnesses does credit to the accused, but, in our view, in the face of the positive evidence we have already considered, it cannot turn the scale in his favour. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entence passed against him. In the result Criminal Appeal No. 136 of 1959 is dismissed. Criminal Appeal No. 172 of 1959 is preferred by Sayana, Accused-9. He was a building contractor before he was appointed a Director of the Empire. His defence is also that he bona fide acted without knowledge of the conspiracy or the fraud. He was also one of the Directors inducted into the Company by the transfer of qualifying shares from and out of the shares purchased in the name of Accused-7. He was co-opted as a Director on October 17, 1950 under Ex.206C. Though he was not present at the meeting of November 27, 1950, he was present at the meeting of December 18, 1950 and, therefore, with the knowledge that six loans amounting to ₹ 28,80,000/- were advanced without scrutiny of the securities, he was a party in sanctioning another six loans totalling to ₹ 42,80,000/-. He as also a party to the resolution of January 30, 1951 sanctioning a bogus loan to the chief of Bagarian. He was a party to the resolution dated February 9, 1951 when the said loan was confirmed and to the resolution authorizing Accused-9 to operate singly the accounts of the Company. Evidence considered [omitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rge amounts misappropriated to reach the Jupiter Company. It is suggested that he was not well disposed of towards Shankarlal and therefore he could nothave any knowledge of Shankarlal s fraudulent motives behind the purchase of the controlling shares of the Empire. If Shankarlal did not like him lie would not have put him in the key position in the Empire. Indeed, the will of Shankarlal shows that this accused got the best legacy under it. He was the connecting thread passing through the web of conspiracy from beginning to end. Evidence Considered [omitted] x x x x x x x x Learned counsel appearing for this accused Could only argue that the accused was a subordinate of the Directors and that he had followed only loyally the directions given by the Managing Director without any knowledge of the conspiracy. This argument is an oversimplification of the part taken by Accused-10 in this huge fraud. Both the Courts below have held, on the aforesaid circumstances and other evidence; that Accused-10 was an active participant in the conspiracy. In our view, there is ample material to justify ..... X X X X Extracts X X X X X X X X Extracts X X X X
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