(1) The respondent in this appeal was the president of a Co-operative Society called 'The Tape Weavers' Co-operative Society', Tekkalakota and upon information laid by the said Society he was prosecuted and tried by the First Class Magistrate, Bellary on three charges viz. that he having received in respect of the amounts due to the said society, a sum of Rs. 23/- from one Hussainamma, a sum of Rs. 50/- from the Hussain one Sab and another sum of Rs. 50/- from the mother of one Nabi Saheb, misappropriated the same to his own use.
(2) Originally the complaint appears to have been made both under Section 406 as well as under Section 409 of the Indian Penal Code but subsequently the charge under Section 409 of the Indian Penal Code was given up on the ground that the respondent who was only the President of the Co-operative Society could not be described as a public servant. Hence the trial proceeded only for an offence punishable under Section 406 of the Indian Penal Code.
(3) During the course of the trial an agreement purporting to have been entered into between the respondent and the 3 persons mentioned above who had made payments due by them to the Co-operative Society into the hands of which the trail magistrate granted permission under Section 345 of the Code of Criminal procedure to compound the offence. The application for the grant of permission was opposed by the Public Prosecutor on the ground that according to the table attached to sub-section (2) of Section 345 of the Code of Criminal Procedure, the person who could compromise the offence under Section 406 of the Indian Penal Code is the owner of the property in respect of which the breach of trust has been committed.
The contention of the Public Prosecutor was that the three sums of money in respect of which this alleged breach of trust had been committed by the respondent were the property of the Co-operative Society. The counsel for the respondent urged before the trial magistrate that the three debtors of the Co-operative Society who had made these payments continued to be the owners of that money until the said amounts are actually entered in the accounts of the Co-operative Society as having been received for the benefit of the said Society. The trial Magistrate accepted the latter contention and granted permission to compound the offence. The present appeal is by the State in which this view taken by the Magistrate as to the ownership of the money has been attacked as unsound.
(4) A preliminary objection was raised by the learned counsel for the respondent as to the maintainability at the instance of the State under Section 417 of the Code of Criminal Procedure is an original or appellate order of acquittal passed by any lower court whereas the order now appealed against was not an order of acquittal but merely an order granting permission to compound the offence which under the provisions of sub-section (6) of S. 345 of Cr.P.C. has the effect of an acquittal. It is however clear that this wording cannot make any difference between the legal consequences of an order of acquittal upon merits or otherwise under any other section of the Code or of an order passed under Section 345 of the Code which has the effect of an acquittal.
The force of the words 'shall have the effect of an acquittal' is that all the provisions of the Code setting out the consequences of acquittal are automatically brought into operation. It seems to us to hold otherwise would be to refuse to give effect to the provisions of sub-section (6) of Section 345 of the Code of Criminal Procedure. If an order mentioned therein does have the effect of an acquittal, it is as good as an order of acquittal, and if it is an order of acquittal it must be applicable under Section 417 of the Cr.P.C. If therefore the provisions of sub-section (6) of Section 345 have to be given effect to, it must be held that the order is appealable under Section 417 of the Code of Criminal Procedure.
(5) On the main question of law, we have no hesitation in holding that the view taken by the trial Magistrate is unsupportable. It is not disputed that the three amounts of money paid by the three persons mentioned in the charge were the money due to the Co-operative Society towards the price of goods purchased by those persons from the said Society. It is not disputed that those sums of money were received by the respondent as President of the said Co-operative Society and not in his capacity as a private individual not connected with the Society. Whatever may be the powers and duties of the President under the bye-laws of the said Co-operative Society, there can be no doubt that he received these amounts due to the Co-operative Society, to his capacity as its President.
It follows that he did so for and on behalf of the Society and once that position is reached there is no alternative but to hold that when the money was received from the debtors of the Society must be held to have been the owner of the money at the relevant date and the Society alone would be the proper person entitled to compound the offence according to the entry in the 3rd column of the table attached to sub-section (2) of Section 345 of the Code of Criminal Procedure. It is therefore to be held that there was no legal basis for compounding this offence at the instance of the persons who were parties to the agreement on the strength of which the trial Magistrate granted permission to compound.
(6) It has been earnestly pressed before us that the matter of granting permission or not granting permission to compound being one of discretion, we ought not to interfere with that discretion exercised by the trial Magistrate. If it were with regard to a matter of discretion we would have certainly declined to interfere. But the order passed by the trial Magistrate was not merely one in the exercise of his discretion, but one which is based upon an erroneous view of law as to the ownership of the property in the case. So what requires to be decided in this appeal is not the exercise of discretion but a decision on a point of law.
(7) Finally, it has been argued that because the alleged offences are said to have been committed about five years ago, we should not set aside the order of acquittal at this distance of time. If the acquittal had been one on merits of the case or after taking evidence in the case, we would have given effect to this suggestion. The one circumstance however which weights against this consideration is that the alleged breach of trust in respect of the property belonging to the Co-operative Society which was the subject matter of the prosecution at the instance of that Society has been permitted to be compounded without its consent as required by Section 345 of the Code of Criminal Procedure but on the consent of the persons who are really in the position of third parties who have ceased to have any interest in the money which is the subject matter of the offence. It would be dangerous on principle to permit such consequences to flow from an obviously erroneous decision.
(8) We therefore set aside the order of acquittal passed by the trial Magistrate and direct the trial Magistrate to proceed with the trial in accordance with law.
(9) Appeal allowed.