Anantanarayana Ayyar, J.
1. On a police charge sheet, the learned Judicial Second Class Magistrate, Nandikotkur, framed a charge against the sole accused, Bheemanthi Venkata Seshaiah, as follows:
That yon on or about the 6th day of May 1962 at Miduthur being the President of Weaver's Co-operative Society, Miduthur and in such capacity entrusted with monies of the Society committed criminal breach of trust in respect of the said money of Rs. 3325-26 and thereby committed an offence punishable under Section 408 of the Indian Penal Code and within my cognizance.
After full trial, the learned Magistrate acquitted the accused. Thereupon, the learned Public Prosecutor filed this appeal against the acquittal.
2. The prosecution examined three witnesses. Of these, P.W. 1 was the Senior Inspector of Co-operative Societies. P.W. 2 was the then Deputy Registrar of Co-operative Societies who made a complaint, Ex. P. 14, to the Superintendent of Police, Kurnool, and P.W. 3 was the Sub-Inspector of Police, Miduthur who investigated the case and filed the charge sheet against the accused under Section 408, I.P.C.
3 The case of the prosecution is as follows. There was Co-operative Society in Midathur called Midathur Weaver's Co-operative Production and Sales Society. On 18.12.1960, the accused was elected as Director of that Society and subsequently as President. Exs. P-3 and P-4 are the entries in the Minute Book showing such an election. Ex. P-6 is the Bylaws of the Society which runs as follows:
The President shall have the general power of superintendence over all affairs of the society and shall, by virtue of his office, be the treasurer also and shall keep all property of the society under his possession.
In his rapacity as President and as also the ex-officio Treasurer, the accused received and made payments and was in possession of cash balance. Ex. P-7 is the cash book containing entries from 2.7.61 to 6.5.62. At the end of every day there is the signature purporting to be of the accused regarding the closing figures of the day including the closing cash balance. At p. 76 of the cash book, there is as entry bearing the signature of the accused showing the cash balance in figures as well as in words as Rs. 8825-70. The accused has signed his name over the designation 'President.'
4. On an order, Ex. P-1 dated 25.5.62, passed by the Deputy Registrar of Co-operative Societies, Kurnool, the Senior Inspector of Cooperative Societies, P.W. 1, conducted enquiries under Section 88 of the Andhra Pradesh Co-operative Societies Act. In the course of the enquiry, he asked the accused to produce before him the cash balance which was shown on 6.5.62 as the last entry viz., Rs. 3325.76. The accused did not and could not produce the cash balance. On 7.7.62, P.W. 1 recorded the sworn statement. Ex. P-10, from the accused regarding the various matters which were the subject matter of the enquiry. In paragraph 12 of that statement, regarding the cash balance, the accused stated as follows:
Regarding the present Chitta balance of Rs. 3325.76 and Bam of Rs. 200 is due in respect of cloths given in Anamath account. Regarding the remainder I spent a sum of Bs. 400 to meet the society expenses and out of the remainder I gave hand loans of Rs. 215 and Rs. 240 to Chinna Venkataswami and Gontumukkala Naganna respectively. It is true that I spent the remainder, this is, for my family expenses, that is for my family maintenance.
* * * * *As regards the present chitta balance, I will, before 10.8.62, remit into the Central Bank, Kurnool a sum of Rs. 1000 (in words rupees one thousand). As regards the balance I will remit the same into the Central Bank, Kurnool after meeting the members.
5. In pursuance of the undertaking given by him. the accused deposited the amounts as follows;
7.1.1968 Rs. 1000/-8.9.1968 1000/-12.10.1963 27/-16.12.1968 200/-24.2.1964 1098.76 NP.24.7.1964 428.71 towards interest.
Thus the accused made good the entire amount of cash balance and also interest thereon after the date of final payment.
6. When questioned, the accused stated as follows:
Question No. 1 :- The Police of Midathur filed a charge sheet against you alleging that, while holding the office of the treasurer of the Weavers Co-operative Production and Sales Society, you had committed misappropriation of a sum of Rs. 8325-76 and that thereby you had caused the said society, to Buffer a loss of Rs. 8325-76. What do you say?
Answer :- I credited the money. I did not utilise this money for my own use.
Question No. 2 :- P.W. 1 has further stated that during your presidency, on 6-5-62 you wera having with you a sum of Rs. 3325.76 and that you did not produce the same before him. What do you say?
Answer :- The value of the yarn is with the members. Only a sum of Rs. 700/- would be available on that day. The members were not present on that day. The stock relating to the credit was with them.
Question No. 8 :- Have you got defence wit, nesses?
Answer :- I have defence witnesses. They are Dalu Narayana and Poojari Narayana.
7. For convenience of reference in this judgment, I have numbered the above questions as 1, 2 and 8 though, in the actual statement recorded under Section 842, Cr.P.C., they are not the 1st, 2nd and 3rd questions. No question was put by the learned Magistrate regarding the statement, Ex. P-10. Though the accuse cited two defence wit. nesses in answer to question No. 8, he did not examine any of them.
8. The learned Judicial Second Class Magistrate, found that the charge was not proved against the accused for the following main reasons;
1. The prosecution did not examine Chinna Venkataswamy and Gontbu Venkata Naganna to know whether they have received Rs. 215 and Rs. 240/. from the accused and Nookala Seahaiah, the Clerk of the society, to come to the conclusion that the accused was receiving the monies due to the society.
2. The prosecution has not examined even one Director to speak to the fact that the accused had misappropriated the money of the society though the Direotor also had responsibilities in this society.
3. Not even a single member of the society was examined to speak about the conduct or the material act of fraudulent misappropriation by the accused.
4. In Ex. P-10, the accused stated that he gave some amounts to some members and that one Bala Subbarayudu, one of the Senior Inspectors of the Co-operative Society, Kurnool had taken away the radio belonging to this society. P.W. 2, the Deputy Registrar Kurnool never bad a care to ascertain about the radio of this society. The Senior Inspector of the Cooperative Society indulged to instigate the President to forgo the properties of the village societies whenever they pay visits in the pretention of checking accounts.
5. The prosecution failed to prove the dishonest intention of the accused to misappropriate the monies.
9. In Ex. P-7 the accused has signed in his capacity as President on 6.5.1962 mentioning the cash balance as Rs. 3825-76. In answer to question No. 1, the accused did not deny the correct, ness of the case balance, but only pleaded that he credited the money. In answer to question No. 2 he stated that only Rs. 700/- was available on that day and that the value of the yarn was with the members. Having shown the cash balance as Rs. 3326-76. if his case was that the real cash balance which was available on that day was only Rs. 700/-, the burden of proof was on him to prove that it was only Rs. 703/- on that day. He failed to prove it or let in evidence to prove it. He did not examine even the two witnesses cited by him. In cross-examination, s suggestion was made to P.W. 1 as could be seen from the following answer:
In the cash book Ex. P-7 pages from 62 to 76 were written, on the same day on 5.6.62. I did not take the clerk Nookala Seshaiah to Kurnool to write Ex. P-7. It is not true to say that according to my Instructions Nookala Seshaiah the Clerk of the Society had written the cash book (Ex. P-7). Pages 63 to 76. It la not true to say that I took the signature of the accused in Ex. P-7 at Kurnool by force....
10. From the above, it is dear that the accused did not dispute the fact that the signature on 6.5.1962 mentioning the cash balance as Rs. 8325-76 was his; but the accused came forward with a suggestion that P.W. 1 forced him to put that signature. This suggestion was denied and there was no attempt to subtantiate that suggestion. It is dear that the accused has signed the entry in Ex. P-7 showing that the cash balance on 6.5.62 ought to be Rs. 3325-76, In answer to question No. 2, the accused did not state that be had the sum of Rs. 8325-76 with him or that he was in a position to produce that amount or even that he was willing and ready to produce even Rs. 700/-. Therefore, the evidence of P.W. 1 that the accuse3 did not produce and could not produce the amounts during his inspection from 4.7.62 to 7.7.62 is acceptable and there is no room to doubt its correctness.
11. The fact that be did not have the amount, of correct cash balance viz., Rs. 8825-76 with him and that he did not and could not produce it before the Senior Inspector of Co-operative Societies, P.W. 1, who made an enquiry from 4.7.62 to 7.7.62, together with the fact that be did not give any explanation as to bow that amount was not available with him in such a manner as not to involve his having committed, breach of trust is sufficient to draw an inference that he did not have that cash balance with him and that therefore he must have committed a' criminal breach of trust. There is no need to examine any of the witnesses as mentioned by the learned Magistrate in his judgment, to prove the misappropriation and dishonest intention. There is one item of evidence which would dearly and completely prove the conversion of a portion of the money into his own use and consequent commission of criminal breach of trust. That is the confession of the accused in Ex. P-10. Ext. P.10 was not properly proved. There is no room to find that Ex. P-10 was not. given voluntarily or it cannot be taken into account. There is also another important fact appearing in evidence which would have gone far to prove that the accused did not have the amount with him viz., that he was able to pay the same only on later dates in instalments, apart from paying interest on 24.7.1962. Unfortunately, these two items have not been specifically brought to the notice of the accused by way of putting a specific question by the learned Magistrate though he ought to have put such questions. Therefore they cannot be used against the accused. Even apart from these two items, the other evidence available is amply sufficient to prove the offence of criminal breach of trust by the accused of the amount with interest thereon viz., Rs. 3,325-76 Np. Therefore, there is no need to consider the question of ordering a retrial. The accused can be convicted in the appeal for breach of trust.
12. Mr. Somakonda Reddy, the learned Counsel for the accused, has raised the following contentions:
(1) That the accused was not a servant to the Co-operative Society, that there cannot be a conviction under Section 408, I.P.C. and that the proper conviction in the case could be only under Section 403, I.P.C.
(2) That the accused had paid the entire amount even with interest and that, therefore, this is an extenuating circumstance in his favour.
13. The learned Counsel for the accused relies on the decision in Siddappa v. State of Mysore 1957 Mad IJ (Cri) 712 : AIR 1958 Mys 82. In that case, a President of a Co-operative Society had been convicted under Section 409, I.P.C., for breach of trust of a Bum of Rs. 7,849-2-8. In the above case, it was held as follows:
Sri Krishnamurthy contended before me that a charge under Section 409, Penal Code, would not lie against his client for the obvious reason that he was not a public servant. He relied on a decision of the Bombay High Court and also a decision of the Madras High Court to show that the President of a Co-operative Society is not a public servant within the meaning of that expression in the Indian Penal Code. In my opinion this contention of Sri Krishnamurthy should be upheld. The authorities to which he has referred make that position quite clear. But it has been urged by the learned Advocate General that the conviction. If not maintainable under Section 409, I.P.C., can be sustained under Section 406, of the I.P.C. Shri Krishnamurthy frankly conceded before me that be has nothing to say on this point: in other words, he did not dispute that the conviction in question although not maintainable under Section 409, I.P.C. could still be sustained under Section 406 of the I.P.C. The matter, therefore, proceeded before me on the footing that the conviction was sustainable under Section 406 of the Indian Penal Code.
* * * * *As for the sentence, there are some extenuating circumstances which, in my opinion, should be taken into consideration for the purpose of determining whether or not the sentence in this ease should be reduced.... So, although there may be in law a case of misappropriation, substantially the accused bad made go 3d the amount which he was liable to do.... I, therefore, order that the accused do pay a fine of Rs. 300/- only and in default be will undergo simple imprisonment for a fortnight. With this modification, the revision petition is dismissed.
14. In Chandi Prasad v. State of U.P. : 1956CriLJ322 , a contention was urged regarding the conviction which had been made on a Secretary of a Co-operative Society under Section 409 and Section 477A, I.P.C. It had been dealt with by their Lordships of the Supreme Court as follows:
It was next contended that the true status of the appellant was that of a servant and not of an agent, and that be should have been charged not under Section 409. The substance of the charge against the appellant is that, as the promoter of a Society, be lawfully received the amounts paid by Sri Chaturvedi...but that after its incorporation, when be failed on 82.4.49 to hand over those amounts to the Treasurer and to include their names as share-holders in the minutes book, he committed offences under Sections 409 and 477A, I.P.C.
Now what is the status of the appellant as Secretary of the Society in which capacity he committed the offences, servant or agent? The distinction between the two is thus stated in Halsbury's Laws of England, Volume 22 page 118, para 192.
15. In Kerala State v. Kunhikannan Nair : AIR1958Ker103 , it was proved that the Secretary of a Co-operative Society had converted the money of the Society in his hands to his own use. It was held by the Kerala High Court that he would be guilty of criminal breach of trust under Section 408, I.P.C. for such conversion or expenditure and mast necessarily be dishonest.
16. In the present case, the bye-laws (Ex. P-5) apart from Rule 23-A in Ex. P-6 which has been marked, indicate in the other portions that the President was an agent and not a servant. For example, Rule 28C runs as follows:
All litigations by or against the Society shall be in the name of the President. All documents relating to the Society shall be written in the name of the President.
Therefore, the accused could have been charged under Section 409, I.P.C., and not under Section 408, I.P.C.
17. Section 409, I.P.C., is a more serious offence than the offence under Section 403, I.P.C., because the minimum rink of the Court which can try it is a First Class Magistrate and also the maximum sentence is imprisonment for life or rigorous imprisonment for ten years and fine whereas the minimum rank of Court which can try the offence under Section 403, I.P.C., is that of Magistrate of Second Class and the maximum sentence is imprisonment for seven years. The case has been tried by a Second Class Magistrate who was not competent to try the accused for an offence under Section 409, I.P.C. In the circumstances, I consider that the proper course in this case is to convict the accused only under Section 406, I.P.C.
18. A long time his elapsed since the offence took place and the accused has paid not only the entire amount but also the interest thereon to the Society even before the charge-sheet filed. In view of the above facts and circumstances, I find that the interests of justice will be served if a heavy sentence of fine is imposed on the accused.
19. I, therefore, allow the appeal, set aside the order of the acquittal and convict the accused under Section 406, I.P.C., and sentence him to pay a fine of Rs. 500/. (five hundred) and in default to undergo rigorous imprisonsonment for six months. The fine amount will be paid by the accused within a period of one month from the date of receipt of the records in the trial Court.