1. This is a criminal case on the revision side of this Court. The Court took action of its own accord and sent for the record of the case.
2. It appears that the opposite parties, Rudra Dutt Bhatt and Gauri Dutt Karnatak, were two accused persons who were called before a Migistrate to answer charges under Sections 423 and 477-A of the Indian Penal Code at the instance of one Narayan Dutt Tewari. The learned Magistrate, in a judgment in which he stated the facts and the evidence very clearly, came to the conclusion that on the facts found by him no offence under either of the sections had been made out. He accordingly discharged the accused persons. Narayan Dutt Tewari took the matter to the District Magistrate, and while the case was still before him, this Court sent for the record. The Magistrate, in sending on the record, recorded his opinion that there was no case made out under Section 423 of the Indian Penal Code, but there was enough material before the learned trying Magistrate on which he could and should have framed a charge under Section 477-A of the Indian Penal Code.
3. The case has been very ably argued on either side and the question for determination is whether on the facts found, the accused persons were entitled to a discharge or whether a charge should have been framed and the case tried either by the Magistrate himself or committed to the Court of Session. As in my view the order of discharge was not warranted by the statement of the law I will briefly state the facts as found by the Magistrate, without expressing any opinion whatsoever as to whether the facts should be finally accepted or not as correct. It will be for the Court which finally tries the opposite parties to come to conclusions of facts on hearing such evidence as may be adduced on behalf of the defence. The accused persons, I understand, have already been examined by the learned Magistrate.
4. The Punjab Industrial Bank opened a branch at Almora some time in August 1922 and it closed its doors on or about the 6th of March, 1924. The complainant, Narain Dutt, was appointed the cashier on making a deposit as security of a sum of Rs. 5,000. This money was to bear certain interest, and was repayable on the expiry of 12 month sunless of course a fresh contract as to security was entered into. Similarly Gauri Dutt, one of the opposite parties, was appointed an accountant and he deposited a sum of Rs. 1,000 for a period of six months. His appointment was made some time in July 1923 and the money deposited by him was repayable some time in January 1924. The opposite party, Rudra Dutt, as the manager of the local branch; made a deposit of a sum of Rs. 2,000 for a period of 12 months. He was appointed in May 1922. In spite of his repeated offer to resign and request to be relieved he was obliged to continue in office up to some time in January 1924. Narain Dutt Tewari, on the expiry of the six months for which he had made the deposit, brought a suit against the Bank for recovery of his money and obtained a decree. In execution of it he caused the attachment of certain securities (promissory notes) held by the local branch of the Bank, and then it was discovered that the securities had been transferred. It is this transfer and the method by which it was done which forms the subject-matter of Narain Datt's complaint.
5. It appears that there was a firm trading at Almora under the name and style of J. Bhatt and Sons, and Rudra Dutt, one of the opposite parties, was interested in that firm. On the 22nd of December 1923 an entry was made in the books of the Bank showing that J. Bhatt and Sons made a deposit of a sum of Rs. 1,000 in the Bank. On the same date a debit entry was made against Gauri Dutt showing that he borrowed a sum of Rs. 1,000 from the Bank and gave by way of security a promissory note executed by himself and his father. On the same date promissory notes held by the Bank to the value of nearly Rs. 1,000 were sold to J. Bhatt and Sons and they transferred the same to Gauri Dutt. It has been found by the Magistrate that as a matter of fact no payment in cash or kind was made by J. Bhatt and Sons into the Bank. It has been found by the Magistrate that the whole arrangement was really a fictitious transaction and the real transaction, was this: the deposit made by Gauri Dutt was repayable to him on the 17th of January 1924. The doors of the Bank might be closed on any day, it being in such a tottering condition. Gauri Dutt and his father gave the promissory note as against the deposit and in the meantime got back their money in the shape of promissory notes.
6. On these findings, briefly stated, the question that the learned Magistrate had to decide was whether there was an intention to defraud the Bank within the meaning of Section 477-A of the Indian Penal Code. It has been conceded before me, and it was' conceded before the learned District Magistrate that Section 423 of the Indian Penal Code was probably not applicable. The question is as to the applicability of Section 477-A. That the account-books were falsified admits of no doubt. If an intention to defraud is established, there would be a case apparently established against the opposite parties so as to justify further proceedings.
7. Sir Tej Bahadur Sapru with his usual lucidity and clearness has put the entire case of his clients before me. He argued that the opposite parties had not the slightest interest to injure the Bank or any creditors of the Bank to the extent of a single pie. All that they were anxious for was to secure their own money which was going to be justly due to Gauri Dutt. The Bank was still operating though in a very unsatisfactory condition. No undue advantage was taken and only a legitimate claim was satisfied. He pointed out that the District Magistrate himself expressed an opinion on the point as follows:
The extent to which others would be defrauded is no doubt somewhat nebulous and uncertain.
8. Sir Tej Bahadur argued that if in the course of liquidation (the Bank has already probably gone into liquidation) it transpired that in the circumstances in which the Bank was situated Gauri Dutt was not entitled as a creditor of the Bank to the entire amount of his deposit, there would be civil liability against him and he could be made to disgorge the whole or a part of the money taken by him under proceedings taken in liquidation. He cited several cases English and Indian.
9. I have given my best consideration to all arguments and have examined the various cases cited. In my opinion, which I wish to state briefly for reasons already given, viz., the ct39 will have to be retried, there is enough material on the record for directing a further enquiry. Some of the facts as found by the Magistrate have been disputed by the opposite parties and it has been expressly stated that there were material documents in the opposite parties' hands which would establish their innocence conclusively. In the circumstances I will briefly indicate whether in my opinion a case under Section 477-A could be held a? proved on the facts found by the Magistrate.
10. As already stated, falsification of account is admitted. It has been established that J. Bhatt and Sons never made a deposit of Rs. 1,000 and were therefore not entitled to purchase any securities of the Bank. The whole arrangement was one by which Gauri Dutt obtained securities worth his deposit without the higher authorities of the Bank being aware of the fact. The sole question, therefore, is whether in the method adopted there was or was not an intent to defraud. That the falsity of the account was made to deceive the Bank authorities and the officers of the Court in case of liquidation admits of no doubt. If together with the intention of deceiving there be an attempt to obtain an undue advantage, there would be in law an intent to defraud. The case of Queen-Empress v. Mohammad Said Khan (1898) 21 All. 113, decided in this Court as long back as in 1898, is in point. Banerji, J., quoted from Sir James Fitz-James Stephen's History of the Criminal Law of England, Vol. II, p. 121, and held, in the case before him, that whether the wider or the narrower construction adopted by different Courts were adopted, the intention to defraud was established in the case before him. In that case a Police Head Constable had removed adverse remarks from his service roll and fabricated favourable remarks. It was found that the object of Said Khan was to obtain an advantage to himself by way of advancement in service which he was not likely to gain if the adverse remarks were loft on the record. I have no doubt that the interpretation put by Banerji, J,. was a proper interpretation to put on the word fraud and various expressions involving the word as used in the Indian Penal Code. In this ease the intention was to obtain an advantage which could not be obtained at once in a fair manner. The Bank might fail any day and it might take years to recover the money. Then the Bank might not be able to pay its debts to the fullest extent and some of the money deposited might not be realized at all. The mere fact that a sum of Rs. 1,000 was going to fall due shortly was really immaterial. The points urged by Sir Tej Bahadur are really matters that go to extenuate the seriousness of the offence, and I have no doubt that they would be considered (if there be a conviction) when sentence is passed.
11. I hold that the order of discharge was not justified and I send back the record to the District Magistrate of Almora with the direction that it be sent down to the Magistrate who tried the case and, in the case of his transfer, to some other Magistrate for further enqiry.