1. Suit for Rs. 480-5-0 due on a pronote executed by defendant 1 to plaintiff's assignor, defendant 2. The lower Court dismissed the suit and plaintiff petitions in revision.
2. The plaintiff had filed a complaint alleging criminal misappropriation as part of the offence of criminal breach of trust against defendant 1. Thereupon defendant 1 executed a pronote to defendant 2 which she assigned to plaintiff. The learned Subordinate Judge finds this to be a contract against public policy, and has dismissed the suit. The facts are to be found in Ex. C, the letter given by defendant 1 to the plaintiff to this effect:
You have complained against me for breach of trust to pay off the amount due to you.... I have caused to be transferred to you a bond (the suit pro-note)...If there is breach of faith I subject myself to criminal punishment.
3. And the letter from defendant 2, Ex. B is to the same effect.
4. There is nothing against public policy if a person accused of breach of trust or misappropriation chooses to acknowledge the liability and refund the amount. And if after receiving the amount the complainant withdraws from the prosecution of his complaint it need not necessarily be presumed that there was a contract that he should do so.
5. Dishonesty is a necessary ingredient in criminal breach of trust; that is to say, the intention of causing wrongful gain or loss. Often the best evidence of such intention is the fact that the complainant has incurred the loss, and the accused has enjoyed the gain. If the accused restore the money, that evidence disappears. It does not necessarily follow that the accused is innocent; what actually was his intention must be found according to all the circumstances of the case; but it may well happen that, when the evidence of his still retaining wrongful gain is no longer available, the proof of dishonesty will be too weak to justify the further prosecution of the case. The complainant may then choose to drop out; but that by itself neither ends the case nor acquits the accused. The Magistrate with due regard to public interest proceeds under Section 252 (Criminal P.C.) and only discharges the accused under Section 252 if he finds that no case has been made out.
6. In this case it cannot be said, as the learned Subordinate Judge says, that the consideration was the withdrawal of a non-compoundable offence. In the first place defendant 1 clearly states in Ex. C that if there is breach of faith he will subject himself to criminal punishment. In the second place an offence, or rather complaint, cannot be withdrawn under Ch. 21 of the Code Defendant 1 merely did his best to make it clear to the plaintiff that he had no dishonest intention, and that view of the facts seems to have been accepted by the Magistrate, for nothing more was done.
7. There is nothing in all this against public policy. On the contrary if honest people delay paying their dues or rendering their accounts so as to make their creditors think them dishonest, it is in accordance with public policy and to the best interests of all concerned that they should take the earliest opportunity of putting themselves right with the world,
8. The plain facts of this case hardly require to be illuminated by rulings.
9. Cotton, L.J. in Flower v. Saaler  10 Q.B.D. 572 observe, that when a just debt actually exists, and there the transaction between the parties involves a civil liability as well as possibly a criminal act, for the debtor to give security to his creditor is not stifling a prosecution. Dwijendra Nath Mullick v. Gopiram Govindaram : AIR1926Cal59 bears a resemblance very much on all fours with the present case. Muthuveerappa Chetty v. Ramasami Chetti  40 Mad. 285 and Amjadnessa Bibbi v. Rahim Baksh  42 Cal. 286 proceed on the assumption that something illegal has been done, but in this case there is no illegality.
10. It is clear on the facts that defendant 1 is liable for plaintiff's claim and I decree accordingly with costs throughout as against defendant 1 reversing the decree of the lower Court in that respect.
11. I am not prepared to interfere in the case of defendant 2 who obviously was a mere intermediary.