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C.S. Umralkar Vs. Rajkumar Agarwal - Court Judgment

LegalCrystal Citation
SubjectCriminal
CourtMumbai High Court
Decided On
Case NumberCriminal Appeal No. 952 of 1973
Judge
Reported in(1976)78BOMLR677
AppellantC.S. Umralkar
RespondentRajkumar Agarwal
DispositionAppeal dismissed
Excerpt:
.....high court.;that in order to bring home the charge under section 407 of the penal code against the accused persons in the present case, the prosecution must prove, (1) that the accused persons carried on business as carriers, a fact which they admit; (2) that the three drums of chemicals were entrusted to them as such carriers; and (3) that the three accused persons had dishonestly misappropriated or converted the same to their own use. there is no scope in criminal law for invoking the principle of vicarious liability save in certain exceptional cases, and that a master is not criminally responsible for the illegal acts of his servant. the present case does not fall under any such exceptions. the prosecution must, therefore, prove, (1) that the entrustment of the goods was to the..........look after the business of m/s. carriers corporation of india, though they were partners in that firm. accused no. 2 has, however, in the course of his statement, denied that the three drums of cobalt oxide in question were received by his firm and has stated that witness verma had played a fraud in respect of the said goods, the receipt being usually prepared in their firm by the person who received the goods.5. in order to bring home the charge under section 407, indian penal code against the accused persons in the present case, the prosecution must prove, (1) that the accused persons carried on business as carriers, a fact which they admit; (2) that the said three drums of cobalt oxide were entrusted to them as such earners; and (3) that the three accused persons had dishonestly.....
Judgment:

Vimadalal, J.

1. This is an appeal filed by the original complainant, who is the manager of a firm of Clearing Agents named M/s. S.R. Pusalkar & Co. with the leave of the Court, against the acquittal of the three accused persons who are partners of the firm of M/s. Carriers Corporation of India doing business in the transportation of goods, by the learned Presidency Magistrate, 34th Court, Vikhroli, Bombay, of the offence of criminal breach of trust as carriers under Section 407 of the Indian Penal Code. The facts necessary for the purpose of this appeal are quite simple. M/s. Pusalkar & Co. were appointed as Clearing Agents for the State Bank of India at the material time, and in that capacity, on August 28, 1970 they handed over three drums of Cobalt Oxide at the office of M/s. Carriers Corporation of India for being transported to Sonapet and delivered there to the consignee, who was also stated to be the State Bank of India. A delivery chalan was given by an employee of the accused, for the said goods when the same were delivered at the office of M/s. Carriers Corporation of India which was followed the next day by a lorry receipt signed and issued by one Verma, also an employee of the said Carriers Corporation of India. The goods, however, did not reach the consignee, and when M/s. Pusalkar & Co. inquired about the same of M/s. Carriers Corporation of India, they were told that no such goods had been received by their firm and that the lorry receipt had been issued 'by mistake'. On that, a criminal complaint was filed and a charge was framed against the three accused as partners of M/s. Carriers Corporation of India under Section 407, Indian Penal Code. The learned Presidency Magistrate, 34th Court, Vikhroli, Bombay, by his judgment dated February 15, 1973, however, acquitted all the three accused persons on the ground that neither entrustment nor misappropriation had been proved against them. It is against that order of acquittal that the original complainant has with the leave of the Court, filed the present appeal.

2. The appellant's case in this appeal is that, in view of the lorry receipt No. 934 dated August 29, 1970 (exh. G) which has been produced and duly proved in the trial Court, entrustment to the firm of M/s. Carriers Corporation of India and, therefore, to its three partners, by the goods being handed over to an employee of that firm, has been proved. It is further contended on behalf of the appellant that once entrustment to the three accused is proved, it is not necessary for the prosecution to prove anything more and, in the absence of any explanation by the accused persons in regard to their dealing with the goods, an inference of criminal misappropriation should be drawn. In support of that propsition, reliance was placed on the decision of the Supreme Court in the case of J.M. Desai v. State of Bombay. : [1960]3SCR319

3. The facts of the present case are hardly in dispute. The prosecution has examined in the trial Court the complainant Umralkar, who is the manager of M/s. S.R. Pusalkar & Co., as a witness, and he has produced the lorry receipt referred to above, and has deposed that, after clearing the consignment from the Docks, his firm had delivered the goods to the Carriers Corporation of India of which the three accused are partners. The prosecution has also examined one Kondiba Chavan a handcart puller who has stated in his evidence in the trial Court that, on August 28, 1970, he had carried the three drums in question from the Docks, on behalf of M/s. Pusalkar & Co., and had handed them over to M/s. Carriers Corporation and obtained a receipt. He has further deposed that on the next day a lorry receipt (exh. G) was received by him in respect of the same. In the course of cross-examination, the said Chavan has, however, deposed that he could not state the name of the person to whom he entrusted the goods in question at the godown of M/s. Carriers Corporation, but when witness Verma was shown to him, he identified the said Verma as the person who had handed over the lorry receipt (exh. G) to him on the next day. He also identified the said Verma as the person to whom he had delivered the three drums in question at the godown of M/s. Carriers Corporation of India. The said Verma, who was also examined as' a witness for the prosecution, has however denied that it was he who had received the said goods at the godown on August 28, 1970, though he admits that the lorry receipt (exh. G) was signed and issued by him. He has deposed that he did so under the instructions of accused No. 2, who had told him that the goods had been received in the godown and that he should sign a lorry receipt for the same. The bona fides of the said Verma has been sought to be impeached by the accused in the course of his cross-examination, in so far as it has been brought out that he had left the services of the accused firm of M/s. Carriers Corporation of India and had started an independent rival business of his own of the same nature. There seems to be some substance in that contention of the defence, for, at any rate, in one respect he has uttered a deliberate falsehood to the prejudice of the accused persons which he had to retract in cross-examination. In his examination-in-chief he went so far as to state that 'the goods mentioned in exh. G (lorry receipt) were at the time in the godown', but in cross-examination he had to admit that he had never seen the goods mentioned in the said lorry receipt exh. G. I do not, therefore, give any credence to the words which the said Verma has put in the mouth of accused No. 2, viz. that accused No. 2 had told him that the goods had been received in the godown and that the said Verma should sign a lorry receipt in respect thereof.

4. When the goods did not reach their destination and inquiries were made, and a notice addressed to M/s. Carriers Corporation of India by M/s. Pusalkar & Co., M/s. Carriers Corporation of India by their letter dated April 27, 1971 exh. C. stated in clear terms that the goods had never been received by their firm and that the lorry receipt appears to have been issued by mistake without getting the goods in their godown. They further requested Pusalkar & Co, themselves to make inquiries as to who had delivered the said goods and at which godown. In the course of the statements made in answer to questions put to them under Section 342 of the Code of Criminal Procedure, 1898, accused Nos. 1 and 3 have stated that they did not look after the business of M/s. Carriers Corporation of India, though they were partners in that firm. Accused No. 2 has, however, in the course of his statement, denied that the three drums of Cobalt Oxide in question were received by his firm and has stated that witness Verma had played a fraud in respect of the said goods, the receipt being usually prepared in their firm by the person who received the goods.

5. In order to bring home the charge under Section 407, Indian Penal Code against the accused persons in the present case, the prosecution must prove, (1) that the accused persons carried on business as carriers, a fact which they admit; (2) that the said three drums of Cobalt Oxide were entrusted to them as such earners; and (3) that the three accused persons had dishonestly misappropriated or converted the same to their own use. It is well-settled that there is no scope in criminal law for invoking the principle of vicarious liability save in certain exceptional cases, and that a master is not criminally responsible for the illegal acts of his servant. It is only the person who himself does a criminal act that is criminally liable for that act, except in the limited class of eases where mens rea is not a necessary ingredient of the offence. Those exceptions are, for instance, cases where a statute imposes an absolute liability so that mens rea is not required, or cases of public nuisance, or cases in which a person performs an act which is likely to cause danger to others and entrusts it to persons who do not possess the requisite skill. The present case does not fall under any such exceptions. Under the circumstances, it is incumbent on the prosecution to prove each of the above ingredients of the offence under Section 407, Indian Penal Code, strictly, against the accused persons themselves. The prosecution must, therefore, prove, (1) that the entrustment of the goods was to the accused personally, or to their servants or agents to the express knowledge or under the express directions of the accused; and (2) that the dishonest misappropriation was also committed by the accused persons themselves for their own benefit. The argument that, on that view, no carrier could ever be held criminally liable is neither correct, nor one that can affect the well-settled position in criminal law. To take a contrary view would, on the other hand, make it extremely hazardous for people to carry on business, particularly if they do so in a big way and have a large establishment. Generally speaking, cases like the present one are matters for civil Courts and not for criminal Courts, though there is an unfortunate tendency these days of rushing to criminal Courts in order to use criminal proceedings as a lever to obtain quick relief. Every breach of trust is not criminal. Criminal liability must be strictly proved by establishing mens rea, and something more than breach of trust is necessary to bring a case within the purview of a criminal Court. Every case in which there may be civil liability in damages for breach of trust does not, in the absence of mens rea, amount to criminal breach of trust. Reference may be made, in this connection, to the decision of a single Judge of the Court of the Judicial Commissioner of Tripura in the case of Gopal Krisan v. State of Tripura. A.I.R. [1955] Tri 35 The facts of that case were that the accused persons were partners carrying on the business of running a rice and oil mill, and had entered into an agreement with the Procurement Department of the Government of Tripura that they would supply a certain quantity of rice for every maund of paddy supplied to them and charge a certain amount as and by way of milling charges. The accused were, under that contract, bound to supply 586 maunds and 14 chhataks of rice and 614 gunny bags to the Procurement Department, but they delivered only 441 maunds and 16 seers of rice and 493 gunny bags with the result that it was established that 144 maunds and odd of rice and 121 gunny bags remained due from the accused persons. On those facts, the accused persons were prosecuted and were convicted and sentenced by the lower Court of the offence of criminal breach of trust under Section 406 of the Indian Penal Code. They came in revision to the Court of the Judicial Commissioner who allowed the revision petition, set aside the conviction of the accused persons and acquitted them of that offence. In doing so, the learned Judicial Commissioner in a well-considered judgment pointed out that neither the first accused nor the second accused was proved to have been entrusted with any quantity of paddy 'personally', and that the question as to whether the accused had been unable to deliver the remaining quantity of rice and bags by reason of circumstances beyond their control, could properly be determined by a civil Court, but the criminal Court would only be concerned with the fact as to whether there was a dishonest intention or mens rea on the part of the accused in not delivering the fixed quantity of rice in time, or, in other words, whether there was dishonest intention on their part in doing so. After dealing with the evidence, the learned Judicial Commissioner stated that it clearly negatived the assumption that the accused ever wanted to conceal anything from the Procurement Department. He then went on to state as follows (para. 12, p. 38);

Every breach of trust is not criminal. It may be intentional without being dishonest or it may appear to be dishonest without being really so. In such cases the Court should be slow to move and this caution is all the more necessary because there is a tendency to secure speedy results by having recourse to criminal law....

It has further been laid down... that it is only when there is evidence of a mental act of fraudulent misappropriation that the commission of embezzlement becomes an offence punishable as criminal breach of trust.

The learned Judicial Commissioner came to the conclusion (paras. 17 and 21) 'that the shortage in the delivery of rice could not establish dishonesty and that if there was no mens rea on the part of the accused persons, the case would clearly fall within the purview of civil Courts. I agree fully with the observations of the learned Judicial Commissioner in the said ease. In the case of Velji Raghavji v. State (1964) 67 Bom. L.R. 443, S.C. a partner of a firm was prosecuted for the offence of criminal breach of trust under Section 406 of the Indian Penal Code on the ground of his failure to account for monies belonging to the firm. The Supreme Court in allowing the appeal and setting aside the conviction as well as the sentence, laid down at (pp. 446-447) that every partner has dominion over property by reason of the fact that he is a partner, but that is not the dominion of the kind which was required by Section 405. It was stated that in order to establish 'entrustment of dominion' over property to an accused person the mere existence of that person's dominion over property is not enough, but it must further be shown that his dominion was the result of 'entrustment'. It was, therefore, held that unless the prosecution established that dominion over the assets or a particular asset of the partnership was, by a special agreement between the parties, entrusted to the accused person who was himself one of the partners, he could not be said to have received it in a fiduciary capacity or, in other words, could not be said to have been entrusted with dominion over partnership properties. The Supreme Court observed that if the accused choose to use any of the partnership properties for his own purposes, he might be accountable civilly to the other partners, but he did not thereby commit criminal misappropriation because he has himself an undefined ownership along with the other partners over all the partnership assets. Turning to the facts of the present case, in the light of these legal principles, in my opinion, the evidence discussed above, does not prove that the three drums of Cobalt Oxide in question were entrusted to any of the accused persons personally, or to their servant or agent with their knowledge or under their directions. In view of the fact that I have disbelieved the evidence of Verma when he stated that the second accused had told him that the goods had been received in the firm's godown, I hold that no such entrustment is proved.

6. In my opinion, the evidence in the present case also does not establish that the accused persons themselves dishonestly misappropriated the said three drums of Cobalt Oxide. In that connection, strong reliance was placed by Mr. Chamboowala on behalf of the complainant on the leading case of J.M. Desai, v. State of Bombay. In that case, the Supreme Court laid down (para. 4) that to establish a charge of criminal breach of trust, the prosecution is not obliged to prove the precise mode of conversion, misappropriation or misapplication by the accused of the property entrusted to him or over which he has dominion. It further laid down that the principal ingredient of the offence being dishonest misappropriation or conversion which might not be ordinarily be a matter of direct proof, entrustment of property and failure, in breach of an obligation,, to account for the property entrusted, if proved, might 'in the light of other circumstances', justifiably lead to an inference of dishonest misappropriation or conversion. It was further observed that the conviction of a person for the offence of criminal breach of trust may not, in all cases, be founded merely on his failure to account for the property entrusted to him, or over which he has dominion, even when a duty to account is imposed upon him, but where he is unable to account or renders an explanation for his failure to account which is untrue, an inference of misappropriation with dishonest intention may readily be made. There are two answers to the application of the principle of J.M. Desai's case to the present appeal, and they are, first and foremost, that since I have come to the conclusion that entrustment to the accused persons personally, or to their servants or agents to their express knowledge or under their express direction is not proved, the question of drawing an inference of dishonest misappropriation by reason of their failure to deliver the said goods or account for them in any manner as laid down in J.M. Desai's ease does not arise at all. Secondly', even if I am wrong in the view that the evidence in the present ease does not establish entrustment to the accused persons personally, or to their servants or agents to their express knowledge or under their express directions, the principle of J.M. Desai's case cannot be invoked in 'circumstances' like those of the present case in which the said goods may well have been misappropriated by or may have been lost or stolen on account of the negligence of, any servant of the firm of M/s. Carriers Corporation of India, because to apply that principle to such a ease would amount to invoking the principle of vicarious liability in a criminal matter. In this connection, it is important to bear in mind that the inference which the Supreme Court stated as being a proper inference to draw in cases of criminal breach of trust is not one that must be drawn in every case. The Supreme Court itself has qualified its statement of the law by stating that such an inference might be drawn 'in the light of other circumstances'. In my opinion, in a case in which the partners of a firm are sought to be made liable, it would be wrong to draw an inference of the nature of the one which was drawn by the Supreme Court in J.M. Desai's case.

7. In the result, I hold that, on any view of the matter, the acquittal of the three accused persons must be confirmed and this appeal dismissed.


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