L.N. Chhangani, J.
1. The facts giving rise to this revision are not in as-puts and may be briefly stated as follows-
The State Trading Corporation of India Ltd., New Delhi, allotted some quota of skimmed milk powder ff sais in Rajasthan State ana the Rajasthan State Government, while appointing different dealers for different areas, appointed the petitioner as a dealer for the Ajmer area vioe its letter No. F. 9(1)(6)/lnd/(C) Sup/59 dated the m October, 1959, and allotted a quota of 50 tons of skimmea milk powder. The allotment was made subject to the following conditions-
1. That the milk powder was to be sold at 72 nr. per in polythene bags, per head at a time.
2. That the material was required to be sold to omy bona fide small consumers. In on case, it was to be sold to the Halwaies, Confectioners, Tea-stalls etc.
2. In violation of these conditions, which the petitioner had undertaken to fulfil, he delivered 167 bags of 50 lbs each of the said milk powder to a Calcutta party namely, Shri Nattu Bhai Rawji Desai for Rs. J3-00U/- tor expnrting it outside Ajmer District, and this milk was seized by Shri M. L. Goyai, Sub Divisional Officer ..no Magistrate, Ajmer, at 10 miles from Ajmer. at inane whilst was being taken In a truck outside Ajmer. On these facts, the petitioner anrf Nattu Bhai Riwji besai were challaned Under Sections 406, 411 and 114, Indian Penai Code. The Magistrate framed a charge Under Section new, Indian Penal Code, against the petitioner. The petitioner went In revision to the Sessions Judge. Aimer, far auasmng the charge. The Sessions Judge dismissed the revision observing as follows:-
In my opinion, even if the legal ownership had vessel in the petitioner, still the beneficial Interest remained with the Collector and the ovule and if there has Been any breach of trust for the same, the nemmner is to answer it as the beneficiary has every right to see wat the skimmed milk powder was sold by the applicant in accordance with the terms and conditions imposed by me Collector.
The petitioner has come to this Court In a further revision.
3. Mf. Munat Behari Lal Bhargava, appearing for me petitioner, has contended that the finding of the sessions Juoge that beneficial interest remained with the uonecrai aim the pubic is altogether without foundation and mat there are no materials on record to justify the finding, it was contended that the petitioner Having paid the price am borne all other expenses was full owner of the SKimmeu milk powder and was not holding it or any oenetlcial interest therein on behalf of any-body. He admitted that tne petitioner had agreed to eftect sale on certain conditions and sold the skimmed milk powder to Mr. Desai in violation of conditions but contended that the breach of tnose conditions could not make him liable Under Section 406, Indian Penal Code, as the mam element of entrustmerrt is lacking. His client's conduct may be morally reprehensible and may constitute a breach of contract but there is no basis for his prosecution Under Section 408, Indian Henai Code. Dealing with the three cases, namely, Shah Nairn Ata v. tmperor AIR 1930 Oudh 4in, Muhammad Asnfaq v. Mfitiram Manghanmai AIR 1939 Slnd 1 and Emperor v. Ghanshamdas AIR 1928 Sim) 106 relied upon by the sessions Judge in his order, he contended that the decisions of these cases were based on facts materially different from the facts of the present case and they are of no help in arriving at a conclusion that in the facts of the present case there was enlrustment of the skimmed milk powder to the petitioner. On the other hand, he cited Satyendra warn v. Emperor ILR (1947) 1 Cal 97. Sheonarayan Jaiswai v. State of Bihar : AIR1953Pat225 and some unreportea decisions of the Calcutta High Court following ILR (1947) 1 Gal 97.
4. The learned Assistant Government Advocate touna it difficult to support the order of the Sessions Judge.
5. It Is now well settled law that to establish an offence of criminal breach of trust It must be proved that the ownership or berwttcial interest in the property in respect of which criminal breach of trust is alleged to nave been committed, must be in some person other than the accused and the latter must hold It on. account of some person or in some way for his benefit. It is not in controversy that the legal ownership vested in the petitioner and the only question which requires determination is: whether any beneficial interest vested in a person other than the petitioner? The Sessions Judge had observed tar titer beneficial ownership vested in the Collector and me pupate but has not referred to the necessary facts supporting this conclusion, There is nothing In the language of the letters Issued by the Government in connection with the appointment of the petitioner and others as dealers for selling skimmed milk powder which can suggest that me State or the Collector acquired or retained any kind of proprietary interest Wielding beneficial interest in the skimmed milk powder. The State of course was anxious to see that the skimmed milk powder allotted by the State Trading Corporation should be made available to bona fide consumers and, therefore, while appointing dealers to purchase and sell skimmed milk powder, imposed certain conditions under which the skimmed milk powder was to be sold but the Imposition of those conditions could not create- any beneficial Interest in the State, undisputably the petitioner was responsible for payment of the price of the skimmed mim powder to the State Trading Corporation as also for an inciuentar expenses. The liability for any loss, damage or destruction of the skimmed milk powder after It came into tire possession of the petitioner was apparently his mere is not even an agreement between the State and the petitioner definitely and unambiguously indicating twits the petitioner was to act as the State's Agent. Cleany then the property in the skimmed milk powder passed to the petitioner and ha was holding it exclusively on his own benaft. Indeed it cannot be reasonably suggested that in the circumstances the State should be treated to have purcnasec the skimmed milk powder from the State Trading corporation aim to reeve entrusted the skimmed milk power to us petitioner as its agent. In my opinion, the In nutrition conditions by the State under which the skimmed mum powder was to be sold was essentially an exercise of regulatory power by the State that too In the exercise administrative side and not under any statutory powers. The agreement of the petitioner to sell skimmed rank paw on the conditions imposed of course created a moral lability and might have also created civil liability but could not affect his proprietary title- so as to create the status of the petitioner as that of an agent of the State, It follows that the State or the Collector could not n said to have acquired and retained any beneficial interest. It is equally difficult to accept that the pacific of Aimer district as prospective purchasers had acquired any Dene-ficial interest in the skimmed milk powder. They courier acquire skimmed milk powder only after purchasing and paying the price and, therefore, could not be said to nave had any vested interest so as to bring about fiduciary relationship between them and the petitioner. The fact was the seller had agreed with the State to sell the simmer milk powder to bona fide consumers in the Ajmer aisinci ant' at certain fixed price could not be sufficient to create any beneficial interest in the skimmed milk powder them. In these circumstances, it is difficult to hold that either the Collector or the public had any beneficial interest in the skimmed milk powder and that the petitioner was holding it in trust for them. The Oudh and Sind cases relied upon by the Sessions Judge, as rigritly pointed out oy Mr. Bhargava, are based on different facts and are no, helpful in the facts of the present case. In the ouch case AIR 1930 Oudh 401 the accused was managing a large property under a definite agreement to get 3/Mh share for his own use and spent 2/5th on certain religious and educational objects and it having been proved that he was converted it to his own use, some portion of the 2/am share of the profits, which he ought to have devoted it charitable objects, it was rightly held that there was entrustment and he was rightly convicted of art offence of criminal breach of trust. In AIR 1939 Sind 1 the txiyw obtained Roods from purchaser under a trust receipt and although on the facts a charge of criminal breach of truss was not held, observations to the following effect were made.-
That if the trust receipt is, what is really intense to be a trust agency, whereby the buyer binds himself the sell the goods on behalf of the seller and is entrustst with the goods under certain clear terms and conditions, there is an entrustment within the meaning of Section 415, and if there be a violation of the terms and conditions of the entrustment with the necessary intent, there can of a conviction for criminal breach of trust.
This decision also cannot be of much help. Similarly, the principle laid down in AIR 1928 Send 106 that 'whefl money 15 entrusted within Section 405 to the accused n should be transferred to him under such circumstances which show that, notwithstanding its delivery, the property in It continues to vest in the prosecutor, and the money remains in the possession or control of the accused as a bailee, and in trust for the prosecutor as bailor, to be restored to him or applied In accordance with his Instructions although unassailable, is of no or little use in deciding the present case,
6. On the other hand, the cases relied upon by Mr. Bftargava are nearer to the case in hand. In ILR (1947) 1 cal 97 a contractor had obtatned a permit for 7 tons stagnant on condition that the same was to be used in connection with the construction of quarters, for which the ton tractor had entered Into a contract with the Government. After obtaining the same, 6 tons of cement were virtue and disposed of for another purpose. On these facts, the contractor was prosecuted for criminal breach of trust, u was held that even though the contractor could not nave obtained the permit if it had not been intended to 8 used for the specific purpose, still when he was the purchaser he could not be said to have been entrusted wim me goods, property in the goods having passed to him, and that he could not therefore be held to be guilty of criminal breach of trust even if he diverted and dispose of the goods for a purpose other than that for which ns was given the permit.
7. In : AIR1953Pat225 the proprietors of certain distilleries obtained permits for lifting molasses to be used as raw material, Part of molasses obtained on permits was not taken to the distilleries but was sold in the Dias-market. In connection with a charge Under Section 401, Indian Penal Code, in respect of molasses, the learneo Judge of the Patna High Court stated the position as follows:
As far as I can make out, the correct position a that the distillers, who worked under licenses granted to them, required molasses as raw material; for movement of molasses they obtained permits from the Excise commissioner; they paid for the molasses as also for the transport of the molasses to the distilleries; they manufactured spirit out of the molasses and sold the spirit to the warehouses or licensed vendors under the terms of the licenses granted to them. In the circumstances stated above, I do not see how can it be said that the property in molasses or any dominion over thin was 'entrusted' to the distillers.
8. ILR (1947) 1 Cal 97 has been followed in subsequent cases of the Calcutta High Court and. the learned Counsel for the defence produced certified copies of two tm reported decisions. Reference may be made only to the Superintendent and Remembrancer of Legal Affairs, Government of West Bengal v. Kshitish Chandra Monaai, decided on 8th June, 1961 (Cal). The accused In that case was appointed dealer under the Modified Rationing scheme at panchuria Dharmatola for the distribution of rice to consumers under modified rationing scheme under some agreement. The accused received 30 rods, of atap rice wrought the storing agent at Bhangore but instead of carrying the rice to his ration-shop at Panchuria Dharmatola, he arranged to transport the rice by boat to samovar, Calcutta, for selling the rice in the folacnarket. These facts were naiad proved and yet following the case ILR (1947) 1 Cal a it was held that there was no entrustment within the meaning or Section 405, Indian Penal Code.
9. The facts in the cases relied upon by Mr. Bnargava resemble closely to the facts of the present case and applying the reasoning adopted in these cases to the facts of the present case, I have no hesitation In holding that the skimmed milk powder cannot be said to nave keen entrusted to the petitioner within the meaning or reaction 405, Indian Penal Code. There is no legal basis j to frame a charge Under Section 406, Indian Penal Code, against the petitioner. The trial Magistrate was wonky 'Wong in framing the charge and the learned Sessions Judge was not justified in maintaining the charge and dismissing the revision application,
10. The revision is, therefore, accepted and the charge against to petitioner is quashed and he is dischargead.
11. Before parting with the case, I must mention mat there is no doubt that the act of the petitioner is amisociai and morally reprehensible and It is really unfortunate that such acts should go unpunished it, however, could not be helped. The remedy as suggested in the last mentioned Calcutta case is that the Government should in sued cases bring about a legal and valid agreement definitely indicating that they appointed dealers as the agents of the Government, or better still to undertake necessary legislation principal or subordinate to ensure that such acts are made punishable as offences.