P.V.B. Rao, J.
1. This appeal is filed by the Government of Orissa against the acquittal of the respondent on appeal by the learned Sessions Judge, Sambalpur. The Respondent was convicted by the Munsif-Magistrate, 1st class. Bargarh under Section 408 of the Indian Penal Code find was sentenced to undergo rigorous imprisonment for one year and to pay a fine of Rs. 1000/- in default to undergo rigorous imprisonment for one year more.
2. The facts of the case are as follows: The respondent was the President and Ex-officio Treasurer of the Birujipali Yarn Distribution Cooperative society affiliated to the Central Co-operative Bank, Bargarh. The Society was registered in 1948. The prosecution case is that the respondent, in his capacity as the President and Ex-Officio Treasurer of the said Co-operative Society, misappropriated a sum of Rs. 1920-9-8. This was detected as a result of three audits conducted by P. Ws. 1, 3 and 4. P. W. 1 audited the accounts for the period between 15-12-48 to 30-6-50 and found the cash balance to be Rs. 2102-9-9 as can be seen from the audit report (Ext. 1). As the respondent was then absent, P. W. 1 could not verify the cash and it does not appear from the evidence that before the second audit this fact was ever verified by the department. P. W. 4 audited the accounts for the period between 1-7-50 to 30-6-51 and found the cash balance to be Rs, 1884-3-6 as per Ext. 6. He too could not verify, according to him, the cash as the respondent was absent. There seems to he no verification, before the third audit was made, by the department concerned. . The audit between 1-7-51 to 30-3-53 was conducted by P. W. 3 who found the cash balance to be Rs. 1920-0-8 as per Ext. 5. It is stated, at that time also the respondent was absent and the cash could not be verified. For three months the department deems to have slept over the matter and P. W. 3 again visited this Society on 9-6-53. It may be noted that between 30-3-53 to 9-6-53 there had been no transaction. The respondent who was found present on 9-6-53, it appears could not show the cash balance and according to the prosecution case, gave Ext. 4 confessing that he had spent the amount on his own account and praying therein that some time might be allowed to him to make good the loss to the Society. The prosecution also alleged that the Assistant Audit officer (P. V. 2) again visited the Society on 27-7-53 and that before him also the respondent admitted the said misappropriation. P. W. 2 then seized the records of the Society for safe custody and submitted a report (Ext. 2) to the Assistant Registrar. On 9-8-53 the Assistant Re-gistrar submitted a report (Ext. 8) to the Sub Inspector (P. W. 5) of Bhatli P. S. to take action in the matter against the respondent specifying the amount defalcated to be Rs. 1820-0-8 which was later on corrected to be Rs. 1920-0-8. After investigation, P. W. 5 laid the charge-sheet.
3. The respondent's contention before the Courts below was that the audit reports were defective inasmuch as several receipts and expenditures were not taken by the auditors into accounts that several papers from his custody were seized by the Co-operative officials and were not produced at the trial; and that his signature Ext. 4 was snatched from him under threat and coercion, the contents of the same having been filled up behind his back. He also stated that some of the customers had taken goods on credit and the amount due from them had not also been taken into consideration while arriving at the figures said to have been defalcated by him. He did not adduce any oral evidence in support of his contentions, but relied only on one document which is Ext. A in the case, a petition dated 28-7-53 to the Registrar, Co-operative Societies.
4. The Munsif Magistrate rejected the defence and characterised it unusually as one intended to throw dust and snatch an acquittal.
5. In appeal, before the learned Sessions Judge it was contended by the accused that the Magistrate had no jurisdiction to try the case and relied upon Section 47 of the Bihar and Orissa Co-operative Societies Act, 1935 which runs as follows:
'No prosecution for an offence under this Act shall be instituted without the previous sanction of the Registrar and the Registrar shall not sanction the prosecution of any person unless he has given such person an opportunity of being heard.'
It was conceded by the Public Prosecutor before the learned Sessions Judge that there was no previous sanction of the Registrar for prosecuting the accused and that the Registrar never gave an opportunity to the accused of being heard in person or through his pleader. The learned Sessions Judge, after a discussion of the provision contained in Section 47 of the Bihar and Orissa Co-operative Societies Act, came to the conclusion that the prosecution was not maintainable without the proper sanction of the Registrar. Curiously enough the public prosecutor appearing before the learned Sessions Judge conceded this proposition of law. But the learned Sessions Judge held that the prosecution did not adduce the required evidence to bring home the guilt to the accused of an offence of criminal breach of trust, did not produce all the relevant documents and let them in evidence, and did not give an opportunity to the accused to look into the documents and substantiate his defence. He consequently held that the conviction could not be sustained and acquitted the accused. It is against this acquittal that the Government has filed this appeal.
6. Mr. H. G. Panda, the learned counsel appearing for the State contended that the learned Sessions Judge was wrong in holding that the prosecution was not maintainable without the sanction under Section 47 of the Co-operative Societies Acts and that the conviction based upon the evidence of the auditors and the audit reports was quite proper and ought not to have been set aside.
7. In support of his first contention, Mr. Panda contends that the offence of criminal breach of trust is not an offence under the Co-perative Societies Act so as to require the sanction of the Registrar. According to his contention, the offence complained of against the respondent is an offence under the general law contained in the Indian Penal Code lor which no sanction is necessary. I think, his contention is quite correct. I have already quoted Section 47 of the Co-operative Societies Act which requires a sanction for prosecution for an offence under the Act. Offences under the Act are contained in sections 45 and 46 in Chapter VII relating to 'Penalties and Procedure'. Section 45 commences by saying that 'it shall be an offence under this Act if' and clauses (a) and (b) enumerate what those offences are. Criminal misappropriation by an officer connected with the Co-operative society is not one of these offences. Section 46 also provides some offences under the Act. This section also does' not enumerate criminal misappropriation as one of the offences under the Act and then follows Section 47 which requires sanction for offences committed under the Act. The learned Sessions Judge quoted the first sub-section of Section 45 and came to the conclusion that not entering an amount into the books of account is an act of negligence contemplated in the section and then relied upon the provision contained in Clause (c) of Section 40 which contemplates a negligent act on the part of an officer of the Society and says that where as the result of an audit it appears to the Registrar that any person who has taken part in the management of the society has by reason of culpable negligence or misconduct insolved the society in any loss or misappropritions or fraudulently retains any property of the society, the Registrar may enquire into the conduct of such person and direct him to make good the loss together with such Sum as he may fix to meet the costs of the proceeding.
Then he says that the recovery of the costs of the proceeding is itself in the nature of a penalty notwithstanding further criminal liability in store for that person. The learned Sessions Judge observes,
'The prosecution evidence in substance is that the appellant, as President and Treasurer, was bound to bring all those amounts into account but he has failed to do so. Not bringing all those amounts into account is an act required to be done by the Act and rules as contemplated by Section 45. The breach of this duty amounts to 'intentionally neglecting to do any act required to be done under the Act' within the meaning of Section 45(1) (a).
In this view of the matter the offence in question must be regarded as an offence under the Act and so the mandatory provision of Section 47 do come into play and that cannot be prevented merely because the offence has been stated by the prosecution to be under the Penal Code.'
This, in my opinion, is a complete perversion of the actual facts in this case. The respondent, according to the prosecution case, was the President and Ex-Officio Treasurer of the Co-operative Society and in that capacity was entrusted with or had dominion over the properties of the Society and the audit reports do show that those amounts were not produced when required.
This, according to the general criminal law of the land, is criminal misappropriation and it is an offence under the Penal Code. This cannot in my opinion, be considered only as a negligent act on the part of the respondent in not entering the same in the account books and in that view of the case the learned Sessions Judgeerred in coming to the conclusion that the prosecution under Section 408 I. P. C. was not maintainable, as no sanction was obtained under Section 47 of the Co-operative Societies Act. Mr. Panda drew our attention to two cases. In the case reported in High Court Proceedings, 22nd February, 1876 ILR 1 Mad 55 (A), it was held by the Madras High Court.
'The ordinary criminal law is not excluded by Regulation VII of 1817, or Act XX of 1863. The permission of the Board of Revenue or of the Committee is required only for the procedure prescribed in the Special Acts, and these special provisions cannot be taken out of the Acts, and applied as a restriction to the ordinary operation of the Criminal law.'
In that case, on a complaint of criminal breach of trust in respect of property belonging to a Hindu temple being preferred against the trustee and manager of the temple, the District Magistrate was of opinion that he had no jurisdiction to entertain the complaint and dismissed the same. The High Court held that the reasons stated by the District Magistrate for that decision that Regulation VII of 1817, section 16, required trustees and managers of Hindu temples to be proceeded against for breach of trust in the manner provided in Regulation IX of 1822 for the punishment of fraud and embezzlement on the part of public servants engaged in the collection of land revenue were erroneous and such complaints according to the provisions of the said Regulation for malversation of temple funds could be entertained without the consent of the Collector of Board of Revenue.
The High Court also held that the general law of the land could not be controlled by such deviations. In a later decision of the Allahabad High Court reported in the case of Emperor v. Joti Prasad Gupta, AIR 1932 All 18 (B), it was held by the Allahabad High Court approving the decision of the Madras High Court quoted above that,
'All acts or omissions in contravention of special or local Acts which are punishable under the said Acts, fall under the definition of 'offences' in the Penal Code and all abetments of offences which are offences under the special or local Acts and are punishable under the said Acts also fall under the definition of 'offences' in the Penal Code.
Where an act is punishable under a special law and also under a general statute, the offender could be proceeded with under either or both but could not be punished twice for the same act or omission which constituted the offence. Where there is nothing in the special Act to exclude the operation of the general criminal law it cannot be inferred that there was an intention on the part of the legislature to exclude it.'
Section 26 of the General Clauses Act also supports the contention of Mr. Panda. According to that provision where a particular act is an offence under two enactments, one the general and the other the special, the accused may be prosecuted under either but cannot be punished twice over. This section therefore contemplates also that prosecution can be proceeded against under the general law and if the respondent can be prosecuted under the Indian Penal Code, it has not been shown how the prosecution is not maintainable. I am therefore of. opinion that the learned Sessions Judge is wrong in coming to the conclusion that the prosecution was not maintainable. In my opinion, the prosecution of the respondent; under Section 408 I. P. C. is certainly maintain-able in law and there is nothing in the Co-operative Societies Act to make it not maintainable.
8. Next Mr, Panda contended that the offence of criminal misappropriation was brought home to the respondent. It cannot accept this contention. In this case the prosecution has not attempted to prove the offence of the accused by producing before the Court all relevant evidence necessary to bring home the guilt to the accused, The learned Sessions Judge has very carefully considered this aspect and discussed the same at length in his judgment and come to the conclusion that the prosecution failed to prove this against the respondent. He held that it appeared from Ext. 1 that although the Society started on 2-7-48 no Inspecting Officer ever paid any visit till P. W. 1 first visited the Society with the result that the management of the Society was hopeless; that the financing bank too had not taken any steps in the matter; that there was no cash book or stock book nor any member register and share register maintained by the Society; that the cash book, sales book and the stock book maintained at the beginning were seized by the C. I. D. police and they were not produced for audit; and that the share account had been maintained in a torn piece of paper, so also the cash book. It is on account of this, P. W. 1 stated that it was exceedingly difficult for him to arrive at the correct financial position of the society. He also noted in his audit report several purchases made from merchants which had not been shown in the cash book. Borrowing of money by this Society from outside creditors had been recorded but the percentage of Interest had not been mentioned in the minute book. The sale proceeds realised by the Society had not been brought in to the cash book. Sale of yam worth more than Rs. 10,000/-had not been shown at all. Purchases of yarn were not supported by invoices. He observed that Ext. 5 also disclosed a similar state of affairs. He held on the evidence of the three auditors that they could not get all the accounts of the society and therefore they could rely only on the accounts maintained by the Central Bank to arrive at the figures said to have been defalcated. But the accounts of the Central Bank were not produced and proved and none of three auditors were able to state without reference to the Central Bank accounts the necessary details.
Therefore the learned Sessions Judge held that it was difficult to say that the amount said to have been defalcated was true or accurate. He also held that some items of the sale proceeds were not collected by the society and the amounts due to the Society on those sales were yet due from the purchasers, p. w. 2 was asked by the respondent in his cross-examination if it was not a fact that some expenditure maintained in small scraps of papers had not been taken into account in arriving at the figure.
But this question was wrongly disallowed by the trying Magistrate as found by the learned Sessions Judge. The mere failure of accounting for the monies entrusted to him may not be sufficient to hold the respondent guilty of criminal breach of trust. That is only an indication of a piece of evidence evidencing the dishonest intention and must be considered along with the other facts of the case. According to the evidence of P. W. 1, there are instances where the payments were made to the Central Bank, but those amounts had not been shown in the Society's account books, and these things noted by the Auditor P. W. 1 were not mentioned in his audit report.
After P. W. 1's audit report, an explanation was called for from'the respondent and there was some correspondence between the respondent and the authorities, but those papers were not produced by the prosecution. In his petition (Ext. A) to the Registrar, the respondent specified certain instances where money paid had not been collected from others. But the department or the auditors never cared to find out if these assertions were true.
9. It is also in evidence that the respondent can only sign his name and the office-bearers of the Society had no knowledge of accounts. In view of these foots of the existence of expenditure noted on small pieces of paper, of the existence of certain dues from many customers of the Society and that the respondent knows only how to sign his name, the learned Sessions Judge came to the conclusion that the offence was not proved beyond all possibility of reasonable doubt against the respondent.
10. With regard to Ext. 4 the alleged confession of the respondent. Ext. 4 is not in handwriting of the respondent. It was got written by a third person and the prosecution says that it was the respondent who got it written through a third person, but the prosecution did not care to examine the person who actually wrote Ext. 4 on the asking of the respondent. It is also possible that the respondent, as held by the learned Sessions Judge, signed that document under fear of a prosecution and due to ignorance. For the reasons stated above, the learned Sessions Judge did not rely upon Ext. 4 as evidencing a voluntary confession of the respondent. I think, in this he is justified.
11. I am therefore of the view that though the learned Sessions Judge came to a wrong conclusion that the prosecution was not maintainable under Section 47 of the Bihar and Orissa Co-operative Societies Act, yet his conclusion that the prosecution failed to prove the guilt against the accused in case the prosecution was held to be maintainable, is quite correct. In this view of the matter the appeal fails and with the modification in the Judgment of the Sessions Court with regard to the maintainability of the prosecution, the appeal is dismissed.
I am constrained to say that in this case the prosecution failed, because the Co-operative department did not exercise proper supervision at the earliest opportunity after the inception of the Society. The prosecution never cared to get the relevant documents necessary to bring home the guilt to the accused proved in this case. The learned Public prosecutor who appeared before the Sessions Court at Sambalpur also made a wrong concession on the maintainability of the prosecution.
12. I agree.