1. These are two connected revisions arising out of the same conviction. Revision No. 1535 of 1953 is by the applicant Chiranji Lal who was convicted under Section 420 of the Indian Penal Code and sentenced to four months' rigorous imprisonment and a fine of Rs. 500/-, in default of payment of fine to a further rigorous imprisonment for two months; and the other connected revision, namely, Revision No. 2001 of 1953, is by Ajodhya Prasad, who was the complainant in the case in which Chiranji Lal was convicted.
2. The facts of the case briefly stated were these:
3. Chiranji Lal, the applicant, was a business man who did some business at Mahoo in the district of Jaipur (Rajasthan). It appears that he had a brother named Moti Lal who was known to a firm called Hiralal Ajodhya Prasad a firm of Commission Agents having an Arhat shop at Shahjahanpur. Ajodhya Prasad and Bam Saroop (P. W. 7) were partners of this firm. It appears further that Moti Lal had some time done some business with firm Hira Lal Ajodhya Prasad. On the 31st of January, 1952, Chiranji Lal came to the shop of Ajodhya Prasad, i.e., firm Hiralal Ajodhya Prasad, at Shahjahanpur with a letter from Moti Lal.
The letter was in the nature of a letter of introduction for Chiranji Lal to the firm owned by Ajodhya Prasad in partnership with another, namely, firm Hiralal Ajodhya Prasad. Chiranji Lal got his introduction to firm Hiralal Ajodhya Prasad on the strength of the aforementioned letter and then he entered into certain transactions through the commission agency of this firm. According to the prosecution, Chiranji Lal purchased goods worth over fifteen thousand of rupees on credit.
Chiranji Lal instructed the firm to despatch the goods by train and send the Railway receipt along with a Hundi for payment--a Hundi Was to be drawn on firm Ramji Lal and Ram Saroop, Bazaz, Hindaun, in the district of Jaipur through some bank. After completing the aforementioned transaction Chiranji Lal entered into another transaction. He asked the complainant to advance him Rs. 1,050/- in cash as he had no money and he wanted money to make some purchases at Bareilly also. The complainant was first unwilling to part with money without there being any security. Chiranji Lal thereupon drew a Hundi in the sum of Rs. 2,000/- dating it the 3rd of February. 1952, on his own firm and gave it to the complainant. Being assured by the Hundi, the complainant agreed to part with the money.
Chiranji Lal did another thing at this stage, namely, he did not take the entire sum of Rs. 2,000/- in cash from the complainant but took only Rs. 1,050/- in cash and said that the balance of Rs. 950/- may be appropriated by the complainant towards part payment of the goods which they were to despatch subsequently in respect of the earlier purchases made by Chiranji Lal. This was a very significant gesture of Chiranji Lal for apparently it had the effect of allaying any suspicions that the firm of Ajodhya Prasad may have had in regard to the bona fides of Chiranji Lal. A sum of Rs. 1,050/- was handed over to Chiranji Lal in cash and in token of receipt of this money in cash Chiranji Lal was made to sign in the books of account of Ajodhya Prasad's firm.
Chiranji Lal thereafter left. The goods were despatched in accordance with the instructions given by Chiranji Lal by the complainant's firm and a Hundi for the same was sent for acceptance through one Parmath Bank. The Hundi was presented through the bank on the 25th of February, 1952, and was returned dishonoured. Subsequently to this the complainant sent his Munim Nand Kishore to the shop of Chiranji Lal but there was no fruitful result. Nand Kishore first Went to Chiranji Lal and asked him about the dishonoured Hundi. Chiranji Lal sent him to Moti Lal and Moti Lal in his turn sent him back to Chiranji Lal; neither was prepared to take any responsibility in regard to this payment. Therefore, Nand Kishore returned and made a report to his master, who thereafter filed a complaint against both Chiranji Lal and Moti Lal for cheating.
4. Moti Lal was discharged by the learned Magistrate on the ground, that apart from giving the letter of introduction to Chiranji Lal there was nothing else in the evidence which could connect Moti Lal directly with the cheating. Chiranji Lal was, however, convicted as stated earlier.
5. The defence of Chiranji Lal was that he never intended to cheat anybody. He denied having entered into the transaction of purchases to the extent of over Rs. 15,000/-. He even denied that he took a sum of Rs. 1,050/- as loan. Chiranji Lal put up a peculiar case. He stated that he had purchased sugar to the extent of Rs. 3200/- only and that in payment thereof he had paid Rs. 150/- in cash and had drawn a Hundi for a sum of Rs. 2,000/- and signed the account-books in token of the remaining balance, i.e., Rs. 1,050/-.
6. The main question that calls for determination in this case is whether the applicant Chiranji Lal had any intention to honour the Hundi which he drew for Rs. 2,000/- and on the strength of which he took a sum of Rs. 1,050/- in cash at the time when he drew that Hundi. The fact that the Hundi was not actually paid when it was presented for payment would not by itself make the accused guilty of cheating. The accused can he held guilty of cheating only if on the circumstances proved by the prosecution we could draw a clear inference, and the only inference, that the intention of the applicant at the time when he passed the Hundi to Ajodhya Prasad's firm was to cheat the firm, not otherwise.
7. In support of their case the prosecution established the following circumstances:
8. The first circumstance, on which reliance was placed on behalf of the prosecution was that Chiranji Lal came to the firm of Ajodhya Prasad with a letter of introduction from his brother Moti Lal. This letter was in the following words:
'We have taken delivery of bilti hundi for Rs. 2,473/6/- in respect of 35 bags of khand. Pleasenote the same. Brother Chiranji Lal is coming. Please help him to purchase goods. We have two shops--1. Shanker Lal Mangi Lal and 2. Shankar Lal Amarchand. Please debit the price in the account of any of the two firms as per instructions of Chiranji Lal. Magh Sudi 3, Sainbat 2008. Convey compliments from Moti Lal to B. Ajodhya Prasad and B. Ram Swarup J. Remain kind to me. This Chiranji Lal is proprietor of the firm Shanker Lal Amarchand.'
From the words of the letter it is perfectly plain that Moti Lal's entire attempt in the letter was to create a confidence not only in the bona fides of Chiranji Lal as a purchaser but also to create a confidence in regard to his ability to meet any credits that may be raised by him. The letter also contained a plea in favour of Chiranji Lal for letting him have credit. So that there 'was clearly a preparation towards an end. This 'end' could be both a legitimate and it could also be the unlawful end which the prosecution suggest the letter was intended to serve. Whether it was the one or the other would, in our judgment, depend upon other circumstances which the prosecution have attempted to prove in this case.
9. The next circumstance on which reliance is placed on behalf of the prosecution was that Chiranji Lal, in order to create confidence, placed an order--a large order for various kinds of goods through the commission agency of the firm of Hiralal Ajodhya Prasad, It was contended on behalf of the prosecution that when Chiranji Lal booked this large order with the firm he had no intentions of taking delivery. In order to prove the intention of Chiranji Lal the prosecution largely depend upon the subsequent conduct of Chiranji Lal, namely, first, his conduct in not accepting the goods and honouring the Hundi, and secondly, his conduct of a total denial in respect of this transaction, and riot only that, but pointing out the various reasons why the delivery was refused.
The case of Chiranji Lal in regard to this transaction was not a clear cut case. What appears to us is that Chiranji Lal attempted to defeat the prosecution version in regard to this transaction on as many grounds as he could think of. The defence in regard to this transaction was, in our opinion, sightly inconsistent also. On the evidence--evidence that has been believed by the Courts below--we are satisfied that Chiranji Lal did in fact enter into the transaction of purchase through the commission agency of Hira Lal Ajodhya Prasad and that he did ask that firm to despatch the goods by train and to send the Railway Receipt along with the Hundi to Chiranji Lal for payment.
The firm did not despatch the goods in the name of Chiranji Lal but they despatched the goods to 'self' and sent the Hundi to Parmarath Bank for getting it honoured by Chiranji Lal's firm. The Hundi having been dishonoured the goods did not fall into the hands of Chiranji Lal or his firm. Attempt was made by the Munim of the firm of Hira Lal Ajodhya Prasad to get payment but neither Chiranji Lal nor his brother Moti Lal did anything in the matter with the result that those goods had to be sold to someone else.
10. The third circumstance on which reliance was placed on behalf of the prosecution is the circumstance of Chiranji Lal not taking the entire money of the Hundi which he drew at Sahjahanpur in favour of firm Hira Lal Ajodhya Prasad for a sum of Rs. 2,000/-. It was pointed out on behalf of the prosecution that if the intention of Chiranji Lal was merely to take a loan of a sumof Rs. 1,050/-, then he should not have drawn a Hundi for a sum of Rs. 2,000/-. The prosecution pointed out that by this circumstance Chiranji Lal tried to create confidence in the firm which facilitated his cheating. Nobody on behalf of firm Hiralal Ajodhya Prasad asked Chiranji Lal to make any deposits in regard to the purchases after they had been made.
So that by leaving a sum of Rs. 950/- an illusory sum in the hands of the owners of the firm Hira Lal Ajodhya Prasad out of the Hundi amount of Rs. 2,000/- Chiranji Lal had no other object but to create a confidence in respect of his bona fides so as to facilitate the getting of at least Rs. 1,050/- in cash from the firm Hiralal Ajodhya Prasad. The defence of the accused that he made purchases to the extent of Rs. 3,200/-and that he paid for it in cash to the extent of Rs. 150/-, signed the Bahi Khata to the extent of Rs. 1,050/- and drew a Hundi of the balance of Rs. 2,000/-, appears to us as it appeared to the Courts below most unconvincing and illogical.
From the defence of Chiranji Lal it does not appear as to how he was going to pay this sum of Rs. 1,050/-. If payment was to be deferred for the balance, namely, for a sum of Rs, 3,050/-, then we fail to see why a Hundi for that entire amount had not been drawn by the applicant Chiranji Lal, for there is no indication in the case of the accused anywhere as to how he proposed to meet the liability which he says he had taken of Rs. 1,050/- by signing in the books of account. The wordings of the endorsement in the account-books also do not help the contention of the accused, they rather help the prosecution contention. We are, therefore, satisfied that the case of the applicant set out in his defence was a false case. We are satisfied that the applicant took a sum of Rs. 1,050/- in cash from firm Hira Lal Ajodhya Prasad and that he took that sum by creating confidence not only by drawing a Hundi for a sum of Rs. 2,000/- but further by not taking the entire amount of Rs. 2,000/- in cash but taking only a sum of Rs. 1,050/-.
11. The subsequent conduct of the applicant in dishonouring the Hundi and setting up a false defence in regard to the transaction was also a circumstance which, in our judgment, should be weighed against the applicant.
12. The question which was argued by Mr. Jagdish Sahai on behalf of the applicant was that on the circumstances, namely, on the circumstance that the accused took a letter of introduction from his brother to firm Hiralal Ajodhya Prasad, on the Circumstance that the accused entered into a transaction of purchase to the extent of over Rs. 15,000/- in value, on the circumstances that the accused drew a Hundi of Rs. 2,000/- in favour of firm Hiralal Ajodhya Prasad & took a sum of Rs. 10,50/- & lastly, on the circumstance that the accused failed to meet his liability namely failed to honour the Hundi when it was presented for payment, it was not established that the accused had at the time when he entered into the transaction, namely, when he gave a Hundi of Rs. 2,000/- to the firm Hiralal Ajodhya Prasad, an Intention not to pay.
It was argued by Mr. Jagdish Sahai that there was no evidence to indicate that the accused had not the capacity to pay and, therefore, there was all the more reason to hold that the aforementioned circumstances were not enough to bring home the charge to the accused. When a person draws a Hundi or a cheque he does thereby make a representation to the person in whose favour the Hundi or the cheque is drawn (1) that he hasauthority to draw that document and draw the document for that amount; (2) that the cheque or the Hundi is good or valid order of payment of its amount; and (3) that the cheque or the Hundi would be paid when presented for payment.
The prosecution in a case of this nature can only establish facts which point prima facie to the conclusion that the failure to meet the negotiable instrument was not accidental but was a consequence expected and therefore intended by the accused. When the prosecution establishes such a kind of prima facie intention, then, in our opinion, the accused has to establish facts which are specifically within his knowledge to show that the result that has followed, namely, the failure to honour the negotiable instrument, was not due to any design or intention but due to some accident.
The prosecution cannot be expected to have knowledge which the accused has in respect of his financial position, particularly as to whether he was in a position to meet his obligation or not specifically; all that the prosecution can do is to place before the Court the circumstances on which it may legitimately be found that the accused had not the intention to meet the demand evidenced by the negotiable instrument. The non-payment is an important circumstance and when the nonpayment is preceded by such circumstances as have been noticed in this particular case then the conclusion becomes irresistible that there was an intention not to pay and that intention was there from the commencement. The accused in this case has said nothing which could either materially alter the conclusion or which could even make one hesitate to draw the aforementioned conclusion. We are, therefore, satisfied that the conviction of the applicant under Section 420 of the Indian Penal Code was right.
13. The question now arises as to whether or not the sentence imposed on the applicant was adequate. It was contended by Mr. B.C. Saxena, appearing on behalf of the complainant, that the sentence was inadequate and should be enhanced. The only ground which Mr. Saxena could and did raise in support of his contention was that cheating in business circles by business-men should be severely punished for unless deterrent sentences were awarded there would be grave danger to the business community from such cheats or confidence tricksters.
Mr. Saxena's argument, in our opinion, overlook's the fact that to a person, who moves about in business community and does business, whether small or large, any conviction or any sentence however small is ruinous, for that forthwith destroys his credit in the market and it is the credit in the market that is the largest asset of an individual doing business. We are, therefore, of the opinion that it was not a case in which there could be any enhancement of sentence. On the circumstances, we are inclined to think that the sentence of imprisonment awarded to the applicant was severe and that it needed reduption. Neither of the two Courts below gave any adequate thought to the matter of sentence. All that the trial Court said while awarding the sentence was this:
'I, therefore, hold him guilty of cheating under Section 420, I. P. C., of which he was charged and sentence him to rigorous imprisonment for four months and also to pay a fine of Rs. 500/- failing the payment of fine to undergo a further rigorous imprisonment for two months.'
The appellate Court only said this in regard to the sentence:
'In my opinion this (meaning the sentence) isquite adequate. The revision petition of the complainant praying that the punishment should be enhanced cannot be accepted.'
None of the Courts below took into accountthe fact that this conviction of the applicant wasgoing to ruin his business credit completely. Therefore, to punish him to a long term of imprisonment and also to punish him with a fine, was toaward punishment which was not in proportionto the crime committed by him. In this connection we have further to bear in mind the factthat the complainant has already filed a civil suitfor the recovery of the money due from the applicant and if his claim is just he would get a decree.Therefore, in our judgment, the sentence of fourmonths' rigorous imprisonment erred on the sideof severity. We, therefore, reduce that sentenceto one of rigorous imprisonment for one mouthonly. With this modification in the sentence andthis modification alone, both the revisions failand are hereby dismissed. The accused is on bail.He must surrender to his bail and serve out therest of his term. His bail is cancelled.