V.D. Bhargava, J.
1. This is a composite application under Section 435 read with Sections439 and 561-A Cr. P, C. and under Article 227 of the Constitution praying that certain criminal proceedings pending in the court of the Judicial Magistrate, Bareilly under Sections 406, 408 and 409 read with Sections 34 and 109 and 420, I. P. C. be quashed.
2. The facts of the case as disclosed in the affidavit accompanying the application in brief are given herein. There is a joint stock concern of the name & style of Messrs. Mira Lal Debi Prasad Ltd., having its heart office at 23/24 Radhey Bazar, Calcutta, of which petitioner No. 1 is the managing director and petitioners Nos. 2 to 4 are the directors. The Indian Turpentine and Rosin Com., Clutterbuck Ganj Bareilly (hereinafter called the Bareilly Firm), through whom the State is represented in this case as an opposite Party, are manufacturers of rosin and turpentine.
There was an agreement on the 23rd May 1949 by which Messrs. Hira Lal Debi Prasad (hereinafter called the Calcutta firm) was appointed as selling agents for a year. This agreement was renewed by another agreement of the 15th July 1950. This second agreement to a certain extent only modified the previous agreement and a certified copy of it has been filed as Annexure D to the affidavit ac-companying the application. The detailed terms of the agreement will be given later on:
In fact the Calcutta firm was appointed as selling agent of the products of the Bareilly firm within a certain area. The quantities were to be allotted by the Bareilly firm. The only restriction to the sale was Ghat they would not sell the goods to those customers with whom the Bareilly firm would make periodical contracts.
The despatches were to be made to the Calcutta firm according to the quota fixed by the Bareilly firm and the Calcutta firm was to take delivery of the goods and store them in the godown of the Bareilly firm at Calcutta and all the expenses of the Bareilly godown at Calcutta were to be borne by the Bareilly firm.
All the payments in respect of goods sold by the Calcutta firm in retail from stocks or to dealers in wagon load lots despatched direct from Clutterbuck Ganj, had to be deposited by the Calcutta firm into the account of the Bareilly firm with the Allahabad Bank, Ltd., Calcutta immediately on receipt, and the Calcutta firm was to be responsible for all bad debts in respect of goods sold in retail ex-godown Calcutta or to dealers in wagon load lots. The rate of commission was fixed for different kinds of supplies.
3. The second agreement of 15-7-1950 was for a period of one year, i.e., from 1-8-1950, and was liable to be terminated by three months' notice from either side. It was alleged that the goods were to be despatched by rail to Calcutta with railway freight pre-paid and the Bareilly firm was to be both the consignor and consignee and the invoices and railway receipt used to be impressed with the seal of the Bareilly firm.
4. This agency admittedly was terminated on the 31st August 1951 by means of a registered notice served by Bareilly firm dated the 28th May 1951 and on the termination of the said period, the charge was taken at Calcutta by Sri Mukandi Lal, Secretary of the Bareillyfirm.
5. There seems to be some dispute between the Bareilly firm and the Calcutta firm, but' the exact nature of it has not been disclosed. Apparently nothing seems to have been done for practically about three years when on 9-5-1954 Sri Mukandi Lal lodged an information with the Superintendent of Police, Bareilly, charging the petitioners with various offences, and on 28th June 1953, a Challan Sheet seems to have been submitted in court by one Mr. Gupta, Inspector, C. I. D,; Bareilly.
On 29-6-1954 the Calcutta firm lodged suit No. 1938 of 1954 on the Original Side of the Calcutta High Court against the Bareilly firm for enquiry into the accounts in respect of the dealings and transactions of the plaintiffs and the defendants and prayed for a decree for such sums of money as may be found due as commission, payable by the Bareilly firm to the Calcutta firm, and further prayed for damages.
Five days thereafter, on 4th July 1954 the Bareilly firm filed a suit in Civil Judge's court Bareilly, as suit No. 60 of 1954. Both the suite were pending when an application was moved in the Bareilly court for stay of suit under Section 10, C. P. C. Which was rejected and the matter is now pending in revision against that order in this Court.
6. An application was moved before the Judicial Magistrate Bareilly, that the Bareilly Court had no jurisdiction to try the offence and further prayed that the Bareilly firm may be directed to produce the two agreements dated 23-5-1949 and 15-7-1950. The learned Magistrate directed the prosecution on 1-3-1955 to tile the aforesaid documents. The documents were filed in Court, but by an 'ex parte' order the prosecution was allowed to take them back.
The learned Magistrate rejected the preliminary objection about the jurisdiction on 5-9-1955 and held against the petitioners, and against that order the applicants went in revision to the learned Sessions Judge, who dismissed the revision by his order dated 15-12-1955. Thereupon, this application has been filed for quashing the proceedings.
7. No counter-Affidavit has been filed on behalf of the opposite party and the facts alleged in the affidavit' filed by the petitioners were not challenged. Two preliminary objections, however, have been taken. The first objection is also being pressed on two grounds. Firstly, that this application is not entertainable under Section 561-A, Cr. P. C. and there should be no interference under that section.
It was argued that section 561-A only preserves the inherent powers of the Court without conferring any additional powers as has been held in 'Emperor v. Nazir Ahmad ; and 'Jairam Das v. Empero , and, therefore, unless there be power found in any other part of the Code, this Court should not interfere. And the second ground on which it was urged, that there should be no interference tinder Section 561-A, was that there has been already a decision by the Magistrate and the Sessions Judge, the proper forum should have been by invoking the revisional powers of this Court.
The second objection was that this Court, in any event, should not interfere at this stage. It was urged that in cases of criminal breach of trust and cheating the exact place where the trial should be held cannot be ascertained unless full evidence has been gone into, and reliance was placed on the Full Bench decision of this Court viz., 'Kanhaiya Lal v. Emperor', 1942 All 148 (AIR V 29) (C), wherein it was laid down-:
'It has not been the practice of this High Court to take evidence in revision applications and, therefore, the parties should not in the anxiety to quash proceedings at the earliest possible stage, bring revisions before the High Court, before the facts have been fully ascertained. Especially in cases involving the question of jurisdiction under Section 181, Criminal P. C., it is desirable that facts should be finally ascertained and the question of law involved should be dealt with in the regular way in the first instance as part of trial, before the remedy by way of revision is resorted to.'
8. I consider that there is no substance in any of the preliminary objections. As regards the first objection, as has already been mentioned, this is a composite application for revision and under Section 561-A and also under Article 227 of the Constitution, Therefore, this Court can certainly quash the proceedings, if it considers it to be a fit case. If no application for revision had been filed this Court would have power to take action suo motu.
Section 435, Criminal P. C. only provides that the High Court may call for and examine the record of any proceedings for the purpose of satisfying itself of the correctness, legality or propriety of any binding, sentence or order. It does not vest any right in any party, though any party or even a third party, may bring to the notice of this Court, any legality or impropriety.
It cannot be doubted for a moment, that this Court, in its revisional jurisdiction, can quash the orders of the Judicial Magistrate &, therefore, if the High Court is possessed of that power and if it were to exercise that power even under Section 561-A, then it would not be exercising any new power but it would be exercising a power which it already possessed. It is true that under Section 561-A, the High Court is reluctant to interfere with ordinary courts of law and substitute its own judgment.
Yet there have been cases where the power has been, exorcised by the High Court under Section 561-A for quashing proceedings. In 'Nand Ram Agarwala v. Emperor', 1947 All 343 (AIR V 34) (D), it was held that in cases where there be no case against the accused and further prolongation of the prosecution would amount to harassment and abuse of the process of the Court, it is the duty of the High Court to interfere under Section 531-A, Criminal P. C. and put an end to the abuse.
Thus in appropriate cases this Court is bound to interfere under its inherent jurisdiction, particularly in cases in which either there would be want of jurisdiction in the court or where prolongation of the criminal proceedings may amount to harassment, If the proceedings were to be quashed on the ground, that, the court had no jurisdiction to proceed in the case, or it was a fit case for the Magistrate for quashing proceedings under Section 203, Cr. p. C., I think this Court could direct the quashing of the proceedings under Article 227 of the Constitution also.
In 'Narayan Singh v. Amar Nath : 1SCR565 , their Lordships of the Supreme Court, after tracing the history of the Article have held that this Article has restored the power of judicial superintendence to the High Court which it had under section 15 of the High Courts Act, 1801 and Section 107 of the Government of India Act 1915, and they have held that this power can be exercised in appropriate cases in order to keep the subordinate courts within the bounds of their authority.
9. Regarding the second objection, it was urged on behalf of the petitioners that if the issue of jurisdiction can be decided on the allegations in the complaint and on the basis of the documents relied on in the complaint itself, the court can interfere at this stage. The jurisdiction is primarily to be decided on the allegations made in the complaint, and reliance was placed on the Full Bench decision of this court in 'Sheo Shankar v. Mohan Sarup', 1921 All 12 (AIR V 8) (F) in which it was held that :
'Now the question of jurisdiction must be decided by a perusal of the complaint. It is on the terms of the complaint that the Magistrate has first to inform himself as to the nature of the case, and see whether from the allegations made in the complaint it would appear that he had jurisdiction to entertain it.'
10. Again in 'Sanwal Das v. Narain Das', 1955 NOC (All) 2768 (AIR V 42) (G), Mr. Justice Mootham (as he then was) on a difference of opinion between Harish Chandra, J. and V. Bhargava, J. held :
'In order to determine the question of jurisdiction the Court should examine the complaint and such statement, if any made by the complainant when title complaint is filed.'
It was conceded by the learned Advocate General appearing on behalf of the State that if the matter can be decided only after a perusal of the complaint then certainly the question can be disposed of But, in case, the assistance of any other evidence is taken then the matter should be decided only after the full evidence has been taken and he in particular appears to be objecting to the original agreement being taken into evidence in deciding the question of jurisdiction. He insists that on the basis of the authority of '1921 All 12 (AIR V 8) (F)', the complaint alone should be looked into.
11. In cases of criminal breach of trust it may sometimes be possible, to decide the question of jurisdiction without taking evidence. On the other hand if it is not possible to ascertain it, at an early stage, in my opinion, as soon as the Magistrate found that he had no jurisdiction it would not be necessary for him to proceed further and have the complete evidence.
It is open to the accused to raise objection to jurisdiction at any time, when he can satisfy the court on the evidence which has come upto that time, that the court has no jurisdiction and, therefore, no further proceedings should be taken. But if the Court cannot come to that conclusion definitely on the evidence, which has been produced, then that objection will not be entertainable.
12. Therefore, in my opinion, the petitioners can take assistance of agreements, if they can be of help in deciding the question of jurisdiction. The Full Bench case, 1942 All 148 (AIR V 29) (C) was a case in which it was not possible for the Court to come to any conclusion about the jurisdiction without taking further evidence, and, therefore, the Court refused to quash the proceedings.
13. It may not be the right of the accused to summon agreements but I have not been able to understand why the prosecution should have felt shy of producing the original agreements. Their Whole case is based on the agreements and those agreements, sooner or later, have to come on the record. I have also not been able to understand why the prosecution was so eager to withdraw those documents when they had once filed them and why the court allowed those documents to be taken without a copy of them being placed on the record.
14. It is the duty of the prosecution to fairly put all the material before the court at the earliest opportunity which is likely to enable the court to come to one conclusion or the other about the jurisdiction of the court. If it can be ascertained at the earliest occasion that the court has no jurisdiction, then considerable time of the court, and also of the prosecution can be saved, and the accused will be saved of unnecessary expenses, botheration and harassment.
In this particular case the prosecution wishes to examine as many as 105 witnesses out of whom more than 80 are from Calcutta and many of the rest are from other towns and the case is likely to take pretty long time and, therefore, I do not see any reason for insisting on the entire evidence being recorded before the issue of jurisdiction is decided.
15. Having thus disposed of the preliminary objection I now come to the merits of the case. In effect the petitioners have been charged with two substantive offences. One comprises in Sections 403, 408 and 409 of the Indian Penal Code, i.e., of criminal breach of trust, and the other under Section 420, i.e. cheating. I will take each of the offences separately and deal with it.
16. First I will take up the offence of criminal branch of trust. There is a specific Section in the Code of Criminal Procedure, i.e., Section181 clause (2) which specifically provides as to where cases of criminal breach of trust are to be tried and that Section reads thus:
'The offence of criminal misappropriation or of criminal breach of trust may be inquired into or tried by a Court within the local limits of whose jurisdiction any part of the property which is the subject of the offence was received or retained by the accused persons, or the offence was committed.'
There was a conflict of opinion in this court as to whether the cases of criminal breach of trust were governed purely by Section 181 (2) or they were governed and controlled by Section 179, Cr. P. C. This controversy was set at rest by a Full Bench decision in Kashi Ram Mehta v. Empero : AIR1934All499 .
17. The question that was for consideration before the Full Bench, in their own words, was 'not whether Section179 applies, it has been overridden by Section181 (2), but whether Section179 at all applies to this case.'
18. On the one hand the view of this Court in the cases of Queen Empress v. O'Brien, 19 All 111 (I), Mahadeo v. Emperor, 32 All 397 (J,), George Langridge v. Grace Atkins, 35 All 29 (K) Mohammad Rashid Khan v. Emperor : AIR1926All463 , S. F. Rich v. Empero : AIR1930All449 and Brij Lal v. Empero : AIR1932All367 was that Section179 would apply and the loss to the employer in case of criminal breach of trust would be deemed to be the consequence therefrom. The decisions were either expressly or impliedly overruled by this Full Bench.
On the other hand the cases which were approved were the cases that took the other view, that the offence of criminal breach of trust is complete as soon as there is misappropriation and there is no question of any loss to complainant being a part of the offence, and, therefore, Section179 did not apply at all. They were Babu Lal v. Ghansham Das, 5 All 333 (O), Ganeshi Lal v. Nand Kishore, 34 All 487 (P), Behari Lal v. Gangadin : AIR1927All69 and Jagannath v. Empero : AIR1934All127 .
19. It was held by the Full Bench, 'If, therefore, the act done and the consequence which has ensued are to be taken as together amounting to the offence, the commission of which is complained against, then it necessarily follows that the consequence must be the necessary ingredient of the offence in order that Section179 be applicable. If the offence is complete in itself by reason of the act having been done and the consequence is a mere result of it, which was not essential for the completion of the offence, then Section 179 would not be applicable.
The illustrations to the Section also make it clear that the consequence contemplated in the Section is a consequence which coupled with the act done constitutes the offence. But if the two can be separated and the act itself is sufficient to constitute the offence, it would make the Section in applicable.' It was further held:
'That this is the correct interpretation is further strengthened by the circumstance, that the Legislature has thought it fit to make special provision about criminal misappropriation and criminal breach of trust in Section 181 Sub-clause (2) but it may be said that this fact in itself would not be sufficient to hold that the two sections do not overlap.
Now, in the case of criminal misappropriation or criminal breach of trust the offence is complete as soon as there is misappropriation or conversion with a dishonest intention. It is not necessary that the loss to the owner should have been actually suffered by that time.'
Thus it was held that in a case of criminal breach of trust the offence is complete as soon as there is conversion or misappropriation and no Question of any consequence therefrom arises. In the concluding paragraph Sulaiman, C. J. after discussing all the authorities of this court came to the consign that
'It is obvious that the opinion in this court has not been altogether uniform and that even in this Court there is plenty of authority in support of the view which has been taken in the other High Courts that Section179 contemplates cases where the act done and the consequence ensuing therefrom together constitutes the offence. In my opinion this is the correct view of the law and the opinion to the contrary expressed by Rafiq, J., Dalai, J., and Bennet, J. in earlier cases must be taken not to be correct.'
This authority was referred to in Kali Charan v. State : AIR1955All462 and was extended in principle also to the offences under Sections 420, 468, 471 and 474 Penal Code. It was observed:
'Offences under Sections 420, 438, 471 and 474, Penal Code would be complete the moment they are committed at any place. Such consequences at other places which would be the result of such conduct cannot be an ingredient of these offences and hence Section179 cannot apply.'
It was further held :
'The offences under Sections 420, 468, 471 and 474 Penal Code are not such which can be committed in more than one place and therefore Section182 Cr. P. C. would not apply.'
20. The Bombay High Court in a Pull Bench case of In re Jiwandas Savchand 1930 Bom 490 (AIR V 17) (T) held:
'Although loss to the principal or employer may be usual and normal result of criminal breach of trust ... it is neither the necessary ingredient nor even the necessary consequence of the criminal breach of trust. It is the act itself which in law amounts to the offence apart from, any such consequence and therefore the jurisdiction to try offences of criminal misappropriation or criminal breach of trust is governed by Section 131(2) and not by Section 179.'
20a. The same view was taken by the Madras High Court in Re, Ram Bilas 1915 Mad 600 (AIR V 2) (U) and Krishnamachari v. Messrs. Shaw, Wallace and Co; 1918 Mad 438 (AIR V 3) (V); by the Calcutta High Court in Simpachalam v. Rati Kanta Laha, 1917 Cal 381 (AIR V 4) (W), Paul Do Flondor v. Empero : AIR1931Cal528 and Niwazilal Modi V. Routmull : AIR1931Cal532 , by the Nagpur High Court in Banerji v. Potnis, 1924 Nag 253 (AIR V 11) (Z) by the Lahore High Court in Aya Ram v. Govind Lal, 1933 Lah 559 (AIR V 20) (Zl), by the Rangoon High Court in Ali Mohamed Kassim v. Emperor 1931 Rang 164 (AIR V 18) (Z2), and by the Patna High Court in Gowakaran Lal v. Sarjoo Saw, 1921 Pat 85 (AIR V 8) (Z3).
21. From these authorities it is clear that unless any act or even omission is a necessary ingredient of an offence of criminal breach of trust, it cannot give jurisdiction to a court where that act or omission has been done, though it may be the necessary result or consequence arising therefrom.
22. I now come to the facts as alleged in the complaint and in the report: --
'(5) According to the aforesaid agreement of May 23rd 1949 the turpentine and rosin used to be delivered to the said Director through the Railway at Clutterbuckganj and the R.R. used to be sent to them at Calcutta. They used to store these goods in our company's godown maintained at our cost at Calcutta.
(6) They were also responsible for the safe custody of goods and their disposal according to the agreed terms by way of genuine sales only. They were to pay the sale proceeds at once and in case they deferred, the realisations were to be paid by them within sixty days from the date of sale to our company. 'For the sake of convenience and economy' they could remit the price through the Allahabad Bank Ltd. at Calcutta. 'The compilation and adjustment of accounts were all the same done at Bareilly' on the basis of returns sent by them in accordance with the agreed terms.
(8) 'Thereafter' they emphasised existence of increased demands of these goods in all subsequent communications addressed to our company and sent false returns showing sale of goods and thus induced the company to make the required supplies which would not have otherwise been made. ....
(9) During this period these persons did not! give the requisite information in respect of accounts which they were legally bound to do and dishonestly concealed the position regarding the collections made by them...... The company continued its efforts to realise the balance for a long time but all attempts having failed the company, decided to take legal action. In this connection 'some enquiries had to be made at Calcutta' which revealed that those persons have committed criminal breach of trust in respect of the goods as well as the funds of the company and that they had cheated our company by their dishonest and fraudulent misrepresentation as noted below :
(a) These persons acting in concert actually submitted false returns by showing bogus sales in favour of fictitious purchasers who did not actually exist and thus dishonestly misappropriated the goods of such bogus sales. The list of such sales is appended as annexure 'A'.
(b) That these persons realised certain amounts of the sale proceeds and dishonestly misappropriated the same instead of remitting them to the company. The list of such realisation so far ascertained is appended as Annexure 'B'.
(c) That these persons by their said dishonest and fraudulent misrepresentation induced our company to part with more goods which would not have been otherwise delivered to them.'
23. I have quoted the relevant portion of the report in cxtenso because it will make the arguments of the parties clear. The learned Advocate General argued that from this report it is clear that the Calcutta firm had delivered all the goods at Bareilly and on account of that fact the goods would be deemed to have been received and retained by the Calcutta firm at Bareilly and, therefore, the criminal breach of trust could be tried at Bareilly under Section181 (2), Cr. P. C.
24. The second line of argument on the basis of the above facts was that since money had to be paid at Bareilly, therefore the case can be tried at Bareilly. The third argument of the learned Advocate-General was that, in any event, account had to be rendered at Bareilly and, therefore, Bareilly court would rightly be possessed of the case so far as the case of criminal breach of trust is concerned. Fourthly, it was contended that the trial can also be held at Bareilly under Section182, Cr. P. C.
25. As regards cheating, which I will discuss later on, the argument on behalf of the State was that since false returns were sent from Calcutta to Bareilly, the Calcutta firm can be deemed to have made fraudulent misrepresentation at Bareilly and induced them from this representation to part with goods which would not have been otherwise delivered to them, and since the goods were parted with by the Bareilly firm at Bareilly, the Bareilly court will have jurisdiction to try the case.
26. As regards the first question, whether the delivery had been made at Bareilly or not Section 405, I. P. C., and Section181(2) need a little examination. The offence of criminal breach of trust has been defined in Section405. For an offence of criminal breach of trust a person has to be 'entrusted with property' or with 'dominion over the property.' If these two things are absent the offence of criminal breach of trust cannot be committed.
Section 181 clause (2), Cr. P. C., says that the case may be 'tried by a court within the local limits of whose jurisdiction any part of the property which is the subject of the offence was received or retained'. Reading the two sections together it is clear that though the receipt of the goods may not be actually delivered, yet the delivery should be in such a way that the accused may have either dominion over or may be said to have been 'entrusted' with it.
27. From the allegations made in the report it is clear that the goods, were actually never delivered to the Calcutta firm at Bareilly. They were given to the railway authorities at Clutterbuck-ganj, and the argument of the Advocate General is that this delivery 'through' the railway should be deemed to be a delivery to the Calcutta firm. Before this delivery can be deemed to be a delivery of the goods to Calcutta firm, it was to be seen whether the accused had any right of disposal or appropriation over it or not. If the possession was of such a nature that they at Bareilly could not misappropriate the property, the delivery will riot be deemed to be a delivery to them.
It has been alleged in para 7 of the affidavit filed by the petitioner, which has not been challenged by the State, that the railway receipt used to be in the name of the Bareilly firm as consignor and consignee. Therefore, none of the accused had any power of disposal or misappropriation over these goods. It is significant that the report is deliberately silent about the fact as to who were the consignors and consignees, particularly when that fact had material bearing on the jurisdiction of the court.
28. Section 25(2) of the Sale of Goods Act says :
'Where goods are shipped and by the bill of lading the goods are deliverable to the order of the seller or his agent, the seller is prima facie deemed to reserve the right of disposal.'
29. Section 181 clause (2) when it gives right of trial to a court where the property is received or retained clearly contemplates such reception or retention by virtue of which the offence of criminal breach of trust could possibly be perpetrated. In this case, there is no question of the ownership of the goods in Calcutta firm, because the goods were to remain in the ownership of the Bareilly firm till they were actually disposed of by the Calcutta firm to some customers. Consequently I am of opinion that the delivery through the railway by booking the goods by the Bareilly firm in their own name cannot amount to a receipt or retention so as to give jurisdiction under Section181 Sub-clause (2), Cr. P. C.
30. Now as regards the question of payment at Bareilly, reliance w,as placed on paragraph 6 of the complaint given above. It was contended that primarily Calcutta firm was liable to make payments at Bareilly and it was only for the sake of convenience and economy that they were allowed to deposit the money in the Allahabad Bank Ltd., Calcutta. This clearly appears to be an afterthought and an improvement on the facts of the case in order to give jurisdiction to the Bareilly court.
It was stated in paragraph 4 of the affidavit that the sale proceeds of Calcutta were to be deposited by the Calcutta Company into the account of the Bareilly Company at Calcutta. This fact also had not been denied by any counter affidavit. On the other hand a copy of the agreement which is Annexure 'D' of the affidavit fully supports it. Paragraph 10 of the said agreement says :
'All payments, in respect of goods sold by you in retail, or stocks or to dealers in wagonload lots despatched direct from Clutterbuckganj, 'shall' be deposited by you into our account with the Allahabad Bank Ltd., Calcutta, immediately on receipt. You 'shall' be responsible for all bad debts in respect of goods sold in retail, ex-Calcutta godown or to any dealers in wagonload lots despatched direct from Clutterbuckgunj and bills not paid within sixty days shall be paid by you into our account with Bank.'
There is no question of convenience or economy by virtue of which the payment was to be deposited at Calcutta. For whatever reasons that clause may have been inserted, for convenience and economy or otherwise, but it was one of the terms agreed upon, and the fact was that money had to be deposited at Calcutta.
There was a mandatory direction to the Calcutta firm to deposit the money there and under the circumstances I am at a loss to understand, how it can be argued that agreement provided that the payment would be made at Bareilly. This argument is in direct teeth of the agreement and the facts of the case.
31. The third argument which according to the Advocate General gave jurisdiction was because accounts had to be finally rendered at Bareilly. He said, that, in any event, the accounts had to be sent weekly according to the agreement regarding stock reconciliation statement, account sales, and particulars of all collections made during the week and copies of bills; and, therefore, by virtue of that fact the Bareilly court can take cognisance of the case.
32. For this proposition reliance was placed on the observations in Full Bench case of ' : AIR1934All499 , 'Mohru Lal v. Emperor : AIR1936All193 , and two recent decisions of Roy, J. viz., 'Ramcharan v. Devendra Kumar : AIR1954All648 and 'Ramchandra Mehrotra v. State', 1955 NOC (All) 3599 (AIR V 42) (Z 6). In 'Kashi Ram Mehta's case (H)', reliance was placed on the observation of Sulajman, C. 'J, where it was said :
'It is therefore not quite accurate to say that Section 179 either controls or is controlled by Section 181. It is to be noted that the Legislature has used the word 'shall' in Section 177 while it has used the word 'may' in all the other sections. Obviously the intention is to widen the scope and permit inquiries being held at more than one place. It is easy to conceive of cases which can fall both under Section 179 and Section 181 or Section 183.'
Thereafter the case discusses that if the dacoity is committed at one place and murder at another place, the case can be tried at either place. Here no part of the offence was committed at Bareilly so far as criminal breach of trust' is concerned. According to my view the non-accounting is no part of the criminal breach of trust. It is really the result or consequence resulting from the criminal misappropriation. Its effect might either be loss to the firm or may result in non-accounting, but that would not make it an ingredient of the offence itself.
33. Learned counsel placed reliance on the other three cases, viz., 'Mohru Lal v. Emperor', (Z4); 'Ram Charan v. Devendra Kumar', (Z 5) and 'Ramchandra Mehrotra v. State', (Z 6), for the proposition that Section405, Cr. P. C. consists of two parts, one a positive part, which deals with what is known as criminal misappropriation or conversion of the property and the other a negative part which consists of dishonestly using or disposing of the property in violation of any direction of law or any contract touching the discharge of trust.
I, respectfully, do not agree with the enunciation of the law. Both the parts, according to me, are positive in their nature. In the first case the positive part consists of criminal misappropriation and the conversion of the property and in the second case the positive act consists in dishonestly using ot disposing of the property in violation of any direction of law or prescribed mode of trust or legal contract. The using or disposing of, are definitely acts and not omissions. I fail to understand how that would amount to a negative act. Even in the second instance unless the property is disposed of or used the offence would not be committed.
As the case of 'Mohan Lal', (Z4) was a division bench case, I would have referred this matter to a larger bench on this question, but since the facts of this case are entirely distinguishable from the facts of that case I do not consider it necessary to refer it to a bench. That was a case in which really the place of misappropriation could not be ascertained and in that event the place where money had to be deposited could be a place where the trial could be held.
The accused was sent to Bengal with instructions to effect deliveries of sugar bags and to realise the price of goods from customers and either personally bring the proceeds to Kanpur or remit the money to Kanpur. In this set of circumstances it was really not possible to ascertain where the offence was committed.
34. It was laid down in the Full Bench case of 'Kashi Ram Mehta v. Emperor' (H) by Sulaiman, C. J. :
'I may in this connection point out that in many cases of criminal misappropriation or breach of trust there may be considerable difficulty in ascertaining the exact place where or the exact point of time when the offence was in fact committed. In cases of such uncertainty Section 182 would obviously apply.
It may also be pointed out that where it is the duty of an agent not only to return specific goods to his principal but to account for that and to render account, offence of misappropriation may not be committed till he had the dishonest intention of causing wrongful loss to his master and wrongful gain to himself, and therefore it may not possibly come into existence till ultimately ha refused either to render account or to pay the balance due.'
According to the decision of the Pull Bench in 'Kashi Ram Mehta v. Emperor', (H), when the place where the offence is committed is ascertainable Section181(2) only will apply, as is clear from the observation of Sulaiman, C. J. when he discussed the case of 'Queen Empress v. O'Brien', (I). That was a case in which Chief Justice Sir John Edge held that the accused actually went to Kanpur and to was there that he failed to render account to his employers and, therefore, the Kanpur court had jurisdiction. Thereupon Sulaiman, C. J. observed :
'In these circumstances, it may be that the learned Chief Justice thought that it was 'not ascertainable', where the offence of breach of trust had been committed and the accused was at Cawnpore and he failed to account for the price of the goods at Cawnpore, the Magistrate at Cawnpore, had jurisdiction to try the case.
But if the learned Chief Justice meant to lay down that even if the offence were known to have been committed somewhere outside Cawnpore, the mere fact, that the consequence, namely, the loss to the employer, occurred at Cawnpore, gave the Cawnpore Court jurisdiction, then, in my opinion, his observation was not right.'
From the allegation made in the report, it is clear, that the offence was complete at Calcutta, and there can now be no doubt about the place where the offence had been committed. Apart from this court, there is considerable authority of other High Courts also on the point, that where the place of offence is known or can be ascertained, the courts of the place where accounts had to be rendered will have no jurisdiction to try the case.
35. This Court in 'Fateh Singh v. Empero : AIR1940All92 , has held :
'Where there is only a liability to account at a certain place and no duty to deliver any property at that place, the criminal court at the place where the accounting is to be done has no jurisdiction to try an offence under Section 409, I. P. C. The mere liability to account is not sufficient to confer jurisdiction upon the place where the accounting is to be done.'
On the question whether non-accounting is embezzlement or not, the observations of Baren Alderson in 'R. V. Davison & Gordon v. Davidson Gordon', (1855) 7 Cox's Cr. C. 188 (Z 8), are of great help. Baron Alderson observed :
'If the non-accounting in this instance was the offence, no doubt, the offence took place in England but the question is, whether the non-accounting is embezzlement.'
And further Baron Alderson said :
'Where there is no evidence of fraudulent embezzlement, except the non-accounting, the venue may be laid in the place where the non-accounting occurred, because the jury may presume that there the fraudulent misappropriation was made, but this 'cannot apply' where there is 'distinct' evidence of misappropriation elsewhere.'
Thus Baron Alderson was of opinion that if place of embezzlement is known, mere non-accounting does not amount to an offence of embezzlement. The proposition of law enunciated above is the same, which this Court has taken and is in conformity with the opinion of other Courts.
36. The Full Bench case of '1930 Bom 490 (AIR V 17) (T), already referred to by me was a case where the complainant entered into partnership with the accused and the accused was sent to Rangoon to manage and conduct business at Rangoon and 'inter alia', he was to send weekly statements on account of partnership to the head office in Bombay and the accounts of the partnership were to be made once a year.
The profit and loss account was to be forwarded by the accused to the Head Office in Bombay immediately after the accounts were made up. The allegation against the accused was that they misappropriated the firm's moneys in Rangoon and falsified the accounts in Rangoon. On the basis of the clause in the agreement for rendering account at Bombay the jurisdiction of the Bombay Court was sought to be invoked and reliance was placed on a Calcutta decision in 'Gunananda Dhone v. Santi Prakash Nandy : AIR1925Cal613 .
It was urged that actually it was at Bombay that after the receipt of false accounts from the accused, that false accounts were made in Bombay and the knowledge of the misappropriation was also at Bombay. The Full Bench disagreed with the Calcutta case. Beaumont, C. J. observed;
'With very great respect to the learned Judges Who decided that case I am quite unable to follow the line of reasoning. It seems to me to involve a confusion between the place where the offence was committed and the place where the complainant first acquired evidence that the offence had been committed, I can see nothing in Section 405 I. P. C. to justify the contention.'
Later Calcutta view is also the same. The case reported in : AIR1925Cal613 , referred to above, was not approved in subsequent decision in : AIR1931Cal528 ', as it was based on an entirely wrong reading of the observations of Baron Alderson.
37 : AIR1931Cal528 ', is a case which, while disapproving : AIR1925Cal613 ', held that:
'If there is evidence apart from the fact of non-accounting to show where the misappropriation was committed, the venue must be laid either in that place pr in the place where the property was received or retained. If there is no evidence to show where the misappropriation was committed other than the fact of non-accounting then the venue may be laid in the place where the accused failed to account, because that is where the offence was committed within the meaning of Section 181(2).'
In that case the accused embezzled money at Srinagar Kashmir State and did not come at all to Calcutta till he was apprehended by the police and was brought for his trial at Calcutta. It was held that the Court at Calcutta had no jurisdiction and his conviction was set aside. To the same effect is the case of : AIR1931Cal532 '.
38. '1916 Mad 438 (AIR V 3) (V)' was a case where a firm dealing in Kerosene oil, authorised an agent in a mofussil station to sell their oil and remit to them at Madras the sale less his commission. The agent sold the oil in the mofussil and without sending the proceeds misappropriated the same. It was held that as the misappropriation and consequent loss occurred to the Madras firm primarily only in the mofussil station, the Magistrate at that station and not the one in Madras had jurisdiction to try the offence under Section 403 or 409, I. P. C.
39. The fourth contention of learned counsel was that, in any event, by virtue of Section 183 the trial could be held at Bareilly as it was uncertain in which of the several local areas the offence was committed. This objection is also disposed of by the above discussion. That Section could only apply if there was uncertainty. But in this case there is no uncertainty so far as the commission of the offence is concerned.
40. The unanimous view of all the High Courts appears to be that a Court at the mere place of accounting cannot have jurisdiction to try the case of criminal breach of trust, if the place where misappropriation took place is ascertain able, and, therefore I am of opinion that the trial at Bareilly of the offence under Sections 406, 408 and 409, I. P. C. is not legal.
41. On the question of cheating I have not been able to understand clearly as to how the complainant wishes to make out a case. According to the report the accused sent some reports of bogus sales which induced the complainant to send goods to Calcutta. There is absolutely no allegation in the report or in the charge sheet filed in court as to what goods were despatched in pursuance of these inducements.
The charge under Section 420 is supported by the learned Advocate-General on the allegation made in paras 8 and 9 (c) of the report quoted above. The notice of the termination of agency was given on 28-5-1951 and it is stated that 'thereafter' the accused emphasised increased demands and sent false returns showing sales of goods and thus induced the company to make required supplies.
What these required supplies were, has not been disclosed anywhere. The supplies according to the agreement were not to be made on any demands from the Calcutta firm, but were to be made according to the 'quota' to be fixed for the area of the complainant by the Bareilly firm and the allotment was entirely at the sweet will of the Bareilly firm, on the allegations made in the complaint & the charge, a very clear case of Section 420 has not been made out and possibly I would have allowed investigation to proceed if, as I will presently show, I was not of opinion that proceedings of this case should be quashed as the case appears to be of a purely civil nature.
It is clear from the agreement and also from the report to the Superintendent, Police, that the reports by the Calcutta firm were to be sent by post and if the reports are sent by post, the post office ordinarily will be deemed to be the agent of the addressee.
42. Thus the inducement, if any, was made by means of letters, and the question arises, if the inducement, when sent by post from Calcutta, will be considered as inducement made at Bareilly. For this reliance was placed by learned counsel for the petitioners on 'In re, Hormasji Ardeshir' 1943 Bom 183 (AIR V 30) (Z10). The accused in this case despatched letters from Nandurbar to various merchants of Bombay ordering goods from them and promising to pay their bills on receipt of the goods from them. He received the goods, accepted them and absconded. A complaint of cheating was filed at Nandurbar.
It was held that the court at Nandurbar had jurisdiction. I do not think that this authority helps the petitioners, because the accused had posted the letters at Nandurbar and there was no question about the post office being agent of the sender or the addressee. If the trial was at Bombay then the question may have arisen whether the letters despatched from Nandurbar could give Jurisdiction to Bombay.
43. Possibly the petitioners can rely on the Supreme Court decision in 'Commr. of Income-tax, Bombay South, Bombay v. Ogale Glass Works Ltd : 25ITR259(SC) . The question in that case was if a cheque is posted either on express or implied request of the addressee, whether the post office would be deemed to be the agent of the addressee or of the sender, and their Lordships held that the principles underlying the English decisions are clearly in consonance with the provisions of the Indian law directing that if it is the request of the addressee that the cheque be sent by post that would make the post office the agent of the addressee.
44. 'H. W. Farmer v. Cawasjee', 1916 All 336 (AIR V 3) (Z 12), was also a case where the post office was held to be the agent of the addressee. If the post office was agent of the addressee the complainant would be deemed to have received the reports at Calcutta. But the question still remains whether the principles involved in the decision of an issue about civil liability can be invoked in a criminal case.
45. Another point that needs examination is, 'where did the complainant know about being cheated?' The report is clear on this point. It was only when payments were not made and all attempts failed that enquiries had to be made at 'Calcutta' which revealed that those persons had committed criminal breach of trust in respect of goods as well as the funds of the company by dishonest and fraudulent misrepresentations. Therefore the legal and actual knowledge both were at Calcutta.
46. However, I do not propose to pursue this matter further, as I am of opinion that the subject matter of prosecution is primarily of a civil nature and the proper forum for the investigation is a civil court.
47. The main contention is that the facts of the case are such that they amount to a civil wrong rather than to any criminal offence. And in particular, it was argued, that now since civil proceedings are pending it would not be desirable that criminal proceedings should simultaneously go on, & reliance was placed on 'Chidambaram Chettiar v. Shanmugham Pillai', 1938 Mad 129 (AIR V 25) (Z 13), 'Ramchandra Babaji, In re', 1933 Bom 307 (AIR V 20) (Z 14); 'Ishar Das v. Emperor', 1927 Lah 145 (AIR V 14) (Z 15) and 'Thakorlal Vadilal v. Ambalal Bhikabhai Patel', 1942 Bom 330 (AIR V 29) (Z 16). On the other hand the learned Advocate General relied on the Supreme Court decision in 'M. S, Sheriff v. State of Madras : 1SCR1144 .
48. Before I discuss the authorities relied on by the parties and other authorities, it is necessary to consider the facts of this case. It is a case of criminal breach of trust and cheating between two firms doing regular commercial business. Many of the transactions in ordinary business can amount technically to criminal offences also and, therefore, it should be seen whether the issues are really of civil nature and can be better decided in a civil court or they involve criminal mentality and should be taken before the criminal court, and whether the public interest will be better served by allowing the continuance of three simultaneous proceedings in civil and criminal courts. It is true that the line dividing between the criminal liability and civil liability is often too fine and decision will depend on the merits of each case.
49. The criminal proceedings in this case have been lodged after a period of about three years on the verge of the expiry of the period of limitation fixed for a civil suit, which the parties must be apprehending. Actually two suits by both the parties have been filed. The main issue in the case appears to be whether the payment has been made to the complainant in full or not.
It appears that the case of the complainant is that they had sent goods to Calcutta for which the payment should have been deposited at Calcutta but was not deposited; on the other hand the case of the accused appears to be, that their commission in full had not been paid; particularly they appear to be claiming discount on these supplies, which, though made subsequent to the cancellation of the agreement, yet were made in consequence of the agreement entered into between the accused and the customers during tine subsistence of the agreement; and if the discount is calculated the accused think that they would be entitled to some money from the complainant.
In effect it is a case in which on adjustment of account payment has to be made by one party or the other. There does not seem to be at any stage, any intention not to pay at all. As I have already pointed out there has been inordinate delay in initiating criminal proceedings and if the complainant really thought that it was case of cheating or criminal misappropriation with criminal mentality it would not have taken him such a long period to discover.
50. Moreover, the criminal proceedings are not likely to terminate at any early date. As many as 105 witnesses are going to be examined, out of whom about 35 are from Calcutta and 5 or 6 from other towns, and they are officers of different departments and their examination within a short time appears to be difficult.
51. I do not think that this prosecution at Bareilly has been launched with 'bona fide' motive. If the majority of the witnesses were at Calcutta, the convenience was to start the case at Calcutta and the case at Bareilly after such a long time smacks of having been started with the ulterior object of compelling the accused to accept the disputed liability with the threat of criminal prosecution.
52. If I may say so with respect, the case of : 1SCR1144 ', was a peculiar case on merits. The facts of the case in brief were that two persons were alleged to have been illegally detained by two sub-inspectors of police and they applied under Section 491, Cr. P. C. to the High Court to be released. Both the Sub-Inspectors alleged on oath that the petitioners were not in their custody. After enquiry it was found that the statements, made by the Sub-inspectors on oath, that the petitioners were not in their custody, was found false and thereafter criminal proceedings were started under Section 193, I. P. C. for perjury by the High Court, which took action under Section 476, Cr. P. C. On the other hand a Civil suit was filed for damages for illegal detention.
In appeal before the Supreme Court against the order of the High Court under Section 476 for prosecution under Section 193, I. P. C., it was urged that both the proceedings should not be allowed to go on. But in that case cause of action for civil proceeding was entirely different from the cause of action for criminal proceedings. One was illegal detention, the other was the filing of false affidavit.
Moreover, criminal proceedings were started forthwith. In these circumstances, their Lordships were of opinion that both the proceedings should continue. But at the same time their Lordships had said that no hard and fast rule can be laid down and special considerations obtaining in' any particular case might make some other course more expedient and just.
53. With great respect again to the observations of their Lordships of the Supreme Court, I might say, that in my opinion, in this case there are special circumstances.
54. As I have already said, that this case to my mind is a simple case of non-payment of price. To me it does not appear from the allegations made in the report that the accused when they got the goods had no intention to pay at all for those goods. (55) Their Lordships of the Supreme Court in 'Mahadeo Prasad v. State of West Bengal : AIR1954SC724 ', have said :
'The High Court observed rightly that if theAppellant had at the time he promised to pay cashagainst delivery, an intention to do so, the factthat he did not pay would not convert the transaction into one of cheating. But if on the otherhand he had no intention whatsoever to pay butmerely said that he would do so in order to inducethe complainant to part with the goods then a caseof cheating would be established.Shadi Lal C. J. in '1927 Lah 145 (AIR V 14) (Z 15)',observed : 'It is a very sound principle that parties should not be encouraged to resort to criminal Courts in cases in which the point at issue between them is one which can more appropriately be decided by civil Court.'
In '1933 Bom 307 (AIR V 20) (Z 14)', a bench of that court held :
'The discretion to be exercised by the High Court in ordering stay of criminal proceedings cannot be crystallised into a hard and fast rule, and must largely depend on the circumstances of each case. One point of importance is whether the criminal complaint has been filed before or after the civil suit. If it is filed afterwards an intention to prejudice the civil litigation which is only a matter of inference, may often be suspected especially when there has been a long delay.'
In this case technically it may be that the criminal complaint had been lodged a few days before the civil suit, but it had been filed after a long delay, and I think, I can safely infer that it was filed in anticipation of the civil suits which were filed by both the parties soon thereafter.
56. In '1942 Bom 330 (AIR V 29) (Z 16)', another bench of the Bombay High Court held :
'In dealing with an application of criminal proceedings pending a civil suit between the parties, the Court should consider where the public interest lies, and not merely where the supposed interest of the particular complainant lies. The interest of the public is opposed to complicity of proceedings. The Court should not regard the matter as a sort of compensation between the civil and criminal Courts.'
57. In '1938 Mad 129 (AIR V 25) (Z 13)' it was held that :
'In the world of business, things are often, done Which are betrayals of confidence and deceptions which arose moral indignation, but are nevertheless civil wrongs which can be righted by Civil Courts and are not crimes which can be punished by a Criminal Court. Not every immoral act is criminal and it is an abuse of the process of a Court to attempt to create a new crime in order to compel men to conform to a high standard of purity in business dealings or to force them to execute their promises.'
And it was further held :
'Since prevention is always better 'than cure, the obligation to prevent specious and spiteful criminal proceedings for actions which, though strictly dishonourable, yet do not amount to crimes, is one that must never be shirked' And the High Court exercised its jurisdiction under Section 561-A and quashed the proceedings. It may have been the duty and a civil liability to pay the amount to the Bareilly firm and if it has not been paid it may not strictly be called immoral but I think it can hardly be termed as criminal.'
58. 'Kanhaiya Lal v. Bhagwan Das' : AIR1926All30 ', was a case where both civil and criminal proceedings were going on and the question of forgery of a will was involved. Sulaiman, J. (as he then was) was of opinion that criminal proceedings having not been taken on the complaint of a court could not proceed on a private complaint, and he further observed :
'Had I not come to the conclusion that these proceedings should be quashed, I would have had no hesitation in saying that these proceedings ought to be stayed pending the disposal of the civil case. Obviously it would be highly undesirable that the same dispute should be allowed to be fought out in two courts, simultaneously.'
As has been said that hard and fast rule cannot be laid down but cases of criminal breach of trust and cheating should be examined carefully before prosecution is allowed. Walsh, J. in 'Mohan Singh V. Emperor', 1920 All 274 (AIR V 7) (Z 20)', observed :
'Although transactions which involve civil liabilities may amount to criminal offences and often do, so that the dividing line between the two in a discussion of the case is almost indistinguishable. On the other hand I have always set my face strongly against permitting .. .. resorting to the criminal law, not for the purpose of punishing an offender or in the public interest but as a means of exerting pressure to extract money.'
59. 'Mst. Sudeshara v. Empero : AIR1933All818 , was a case of cheating. The complainant had pawned certain ornaments with Smt. Sudeshra and it was alleged on behalf of the complainant that he had paid the money but she refused to return the goods. The defence was that the transaction took place through another lady who had also taken money and had not made the payment. Thereupon criminal proceedings were started.
The trial court said that it is quite true that a suit could be brought in the civil court but the complainant possibly chose the criminal courts simply because they are cheaper. Young, J. held
'This is no ground for making a criminal charge against a person against whom there is a civil claim,' and observed.:
'Too often do persons with claims -- often doubtful -- take criminal proceedings in the hope that the defendant will pay the amount claimed rather than face a criminal charge. To use the criminal courts for enforcing a civil claim is highly improper; it may almost amount to blackmail.'
'Bhagwan Din v. Janki Lal', Cri Misc. Case No. 2327 of 1955, D/- 7-2-1956, (222), was a case under Sections 406 and 420, I. P. C. which was initiated on the ground that certain payments were received by the accused and were dishonestly misappropriated and were not adjusted towards the loan taken by the complainant from the wife of the accused. In that case I quashed the proceedings as I was of opinion that the criminal proceedings had been taken to exert influence over the applicant and as identical questions would be decided by the civil court, I did not consider that it was expedient that criminal proceedings should be allowed to go on. ,
'Ahmad Ullah v. State', Cri. Revn. No. 1332 of 1954, D/- 10-2-1956 (All) (Z23), was a case in which there was a dispute between the complainant and the accused about some ornaments. The complainant alleged that the ornaments had been taken by the accused on false representation & inducement that he would take back his wife if the ornaments were returned to him. The accused took the ornaments but never took the wife back, and, therefore, a charge under Section 420, I. P. C. was framed against him. The defence of the accused was that these ornaments belonged to his mother and they had not been taken by his wife and so he has got them back. The accused was convicted and sentenced to two months' R. I. and a fine of Rs. 300/-. The matter came up before this Court and Hon. Roy, J. observed :
'I am of opinion upon the findings arrived aft by the learned Sessions Judge that no offence of cheating was made out and that the matter was of a civil nature which should not have been brought into a criminal court at all ...... The matter was purely of a civil nature and conviction under Section 420, I. P. C. could not have been sustained. Consequently I allow the application in revision and set aside the conviction and sentence of the Applicant.'
60. A bench of the Calc.utta High Court in 'Kartick Chandra Mukherjee v. B, N. Banerji' : AIR1954Cal547 , held:
'The case was one of breach of contract. The refusal to pay every civil debt does not justify the finding of dishonesty. We are not aware of any case in which the refusal to pay a civil debt of this nature has been held to amount to dishonest misappropriation and we see no reason to extend the meaning of the word to include refusal to pay such debts. We are therefore of opinion that these proceedings should be quashed and we quash them accordingly.'
In 'Begam Rai v. The State : AIR1952Pat154 , the sub-Divisional Magistrate was of opinion that the matter was one of civil dispute and dismissed the complaint. That order was set aside by the District Magistrate on the ground that there had been no examination of the complainant as required under Section 202, Cr. P. C. His Lordship Imam, J. (when he was Judge of the Patna High Court) held:
'That officer (sub-Divisional Magistrate) was fully justified in supposing that the dispute between the parties was of a civil dispute. On the merits, therefore, the District Magistrate ought not to have, in my opinion ordered further enquiry.'
61. In the circumstances, I am of opinion that the criminal proceedings appear to have been taken for the purpose of coercing the petitioners to come to some settlement in the civil claim.
62. So far as the trial under Sections 406, 408 and 409, I. P. C. is concerned, I have already held that the Bareilly court has no jurisdiction and as regards the charge under Section 420, I am of opinion that it will not be in the public interest to allow a prolonged criminal trial for purely civil claim. I, therefore, hereby quash the criminal proceedings pending in the court of the Judicial Magistrate, at Bareilly against the petitioners.