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Bhupendra Nath Sinha Vs. Giridharilal Nagar - Court Judgment

LegalCrystal Citation
Decided On
Reported inAIR1933Cal582,145Ind.Cas.416
AppellantBhupendra Nath Sinha
RespondentGiridharilal Nagar
Cases ReferredIn Emperor v. Jagannath Raghunath Das
- .....the shares unsold were credited to the firm and not to him throughout 1930 and 1931 the firm did fatka business both for sassoon & co. and for themselves, and in 1931 for abraham, and in jute and hessian as well as linseed. these were never shown in the sawda book, but they appear in the linseed fatka book (ex. a), and the rest appear in the jute and hessian fatka book which the prosecution have suppressed. a private telephone connexion was maintained with the firm of gopiram murrarka for fatka business. the payment of rs. 2,751 was made in cash to gopiram, an open cheque for the money was signed by giridharilal, and the payment was debited to the firm. in 1931 all the partners agreed that share speculation tied up too much money, and that jute and hessian fatka instead would be done.....

Lort-Williams, J.

1. The appellant was convicted by the Chief Presidency Magistrate of offences under Section 406, I.P. C, and sentenced to undergo two years' rigorous imprisonment and to pay a fine of Rs. 1,000. The case for the prosecution was as follows: the joint family firm of Baldeoram Behari Lal, now consisting of Murari, Giridharilal and three minors, have carried on business for many years as Bankers and Banias at 49 Strand Road. In 1929 they started another business in hessians and gunnies under the name of Giridharilal & Co. at 135 Canning Street. The accused Sinha was a partner in a firm called Ram Sarup Mamchand, who were sole guaranteed brokers, for hessians and gunnies of David Sassoon & Co. Early in 1930 Girrdharilal proposed to Sinha that he should leave Ram Sarup Mamchand, join Giridharilal and Murari as a partner in their firm of Giridharilal & Co. and induce Sassoon & Co. to give them the appointment of sole guaranteed bazar gunny brokers.

2. Sinha consented, and it was agreed that he should have a seven annas share, and that they would provide a sum of Rs. 3 lacs, which would be required to be deposited as security with Sasoon & Co. Sinha thereupon obtained the appointment, the deposit being reduced subsequently to Rs. 1 lacs.

3. Business commenced, and Sinha used to do all the work of Giridharilal & Co. while Giridharilal and Murari devoted their attention to the business of Baldeoram Bohari Lal. But Sinha had no authority to draw or sign cheques nor, according to Giridharilal had he any right to receive money on behalf of Giridharilal & Co., without the permission of his partners. There was no written partnership agreement, and Sinha denies that there was any restriction upon his receiving money. On the face of it, such a restriction does not sound very plausible, and seems to be in the nature of an afterthought invented to meet subsequent developments. Sassoon's Manager was a man named Abraham, and Sinha suggested to Giridharilal that it would be good policy to offer him a bribe, not only to secure the continuance of the present appointment, but in order to induce him to put other business in the hands of Giridharilal & Co. Sinha says that this was Giridharilal's and Murari's suggestion and that he was afraid that such a bald offer might offend so refined a gentleman, but that his finer susceptibilities would not perhaps be outraged, if share speculation was transacted on his behalf to the extent of Rs. 1 lacs. Whoever made the suggestion first, all three agreed to it, though Giridharilal alleges that Abraham was to bear losses, if any. Abraham's name, for obvious reasons, did not appear in the firm's books in connexion with these transactions, and no agreement was made with him by Giridharilal & Co. Giridharilal admits that subsequently they got a great deal of extra business in jute, rape, linseed and other goods from Sassoon & Co. by favour of Abraham.

4. In addition to their business as brokers, Giridharilal & Co. did a considerable trade as dealers in gunny and hessian, and by October 1930 they had very heavy stocks on their hands, and the firm was working at a loss. Sinha offered to obtain money from Sassoon & Co., Giridharilal and Murari agreed, and Sinha opened a, loan account on behalf of Giridharilal & Co. with Sassoon & Co. for Rs. 1 lacs. There was no written agreement; neither Giridharilal nor Murari had any communication with Sassoon & Co. nor gave any direction about what authority, if any, was to be required, before money was allowed to be withdrawn from the loan account. By this means Sinha obtained for Giridharilal & Co. in October 1930 Rs. 50,000, which was repaid almost immediately and Rs. 75,000, which was adjusted some months later. There was a loss in 1930 on Abraham's share speculations of Rs. 31,000 odd, and this was debited to Sinha. Giridharilal explains this by alleging that when asked to get the money from Abraham, Sinha confessed that his story about Abraham was a lie, and that he meant to take the profits (if any) for himself. Sinha denies this and says that Giridharilal & Co. never intended to charge Abraham with any losses, and they were debited to Sinha benami, because some entry had to be made in order to adjust the books. Sinha was not debited in the balance sheet with any interest on the amount advanced, for share speculation, but in the journal for 1931 an entry appears for the first time three months later. Sinha says this is a fabrication.

5. About this time Giridharilal alleges that he discovered a cash entry of Rs. 2,751, made by Sinha on account of differences in hessians, which had not been entered in the sawda (or contract) book and that he complained to Sinha who begged pardon for it. This refers to what are called fatka transactions, that is to say speculations in differences, in the price of goods. The case for the prosecution is that Giridharilal & Co. never dealt in fatka, and had no knowledge that Sinha was doing anything of the kind.

6. In cross-examination, however, a large number of documents, books and entries were put to Giridharilal who was forced to admit that a considerable amount of business in fatka had been done, not only for Sassoon & Co., but on Giridharilal & Co.'s own account. Sassoon & Co. liked them to be called Bhitar Bazar transactions, because the word fatka is applied to gambling deals exclusively, but for all practical purposes they mean the same thing. Whether the transaction amounts to gambling or not depends on the form of the contract and the intention of the parties, and turns largely upon the question whether delivery is intended or not. Further it is clear from Giridharilal's admissions, that the entry of Rs. 2,751 was the balance owing on account of a number of these transactions some of the bills for which bore the signature of Giridharilal. None of them appear in the sawda book, and this bears out Sinha's contention that fakta transactions never appeared in the books, except in the form of a balance.

7. In 1930 the firm incurred a loss of more than Rupees 4 lakhs, Sinha's share being more than Rs. 2 lakhs. This was due almost entirely to losses as dealers in gunnies and hessians. According to Giridharilal there was a profit of Rupees 1 lakhs on their legitimate business of brokerage for Sassoon & Co. There was a discussion between the partners in which Giridharilal and Murari told Sinha that they would not do such business in future and Sinha gave an undertaking in his own writing (Ex. 12) in which he promised to enter all transactions in the sawda book daily, such entries to be examined and initiated by his partners. He further agreed to be personally liable and responsible for all transactions not so entered, examined and initialled. The document continues:

Further I add here that henceforth I shall do no speculative business of any sort in the name of our said partnership business, and if I am hereafter detected to have done so, I shall alone in my personal capacity be liable .... If any business is done by Giridharilal without my consent I shall not be responsible.

8. Sinha's contention is that this did not refer to speculation to be done on behalf of Abraham and that it was agreed henceforth to speculate only in differences on his behalf, because this did not involve tying up the large capital sums required for speculative dealings in shares. As Sinha could not pay his share of the firm's losses, he gave his promissory note as security and three promissory notes executed in favour of his wife. Bach party accuse the other of forgery of the latter. His wife's endorsement was not obtained, nor was any inquiry made from the persons who had executed the notes During the latter part of 1931 Giridharilal was often away at Benares and about the middle of December he went there again, and returned with Murari about the middle of January 1932, when they heard that Sinha had been speculating heavily in fatka. They enquired from Sassoon & Co. and found that he had withdrawn from the lean account Rupees 25,000 on 18th December 1931, Rupees 75,000 on 29th December 1931, and Rs. 15,000 on 18th January 1932, and had repaid Rs. 25,000 on 12th January 1932. They examined the cash-book on 25th and 27th January and found no such entries, but on the 29th when they looked again, entries had been made in the handwriting of Sinha. They referred the matter to one Benoy, who had introduced Sinha to Giridharilal, and he says that Sinha confessed that he had done wrong, asked Benoy to save him, and gave him his pass-book. From the pass-book they discovered that Sinha had paid the three sums mentioned into his private account and on the 27th they accused him of gambling in fatka, and of committing theft, and showed him the entries in his pass-book. He admitted that he had done wrong and asked for forgiveness. Thereupon this prosecution was launched, charging Sinha with misappropriation of these three sums. In the meantime several firms had made claims on Giridbarilal & Co. for considerable sums arising out of fatka transactions and litigation is pending.

9. The case for the defence is that from first to last all the partners knew and agreed to speculate for the benefit of Abraham as a bribe to induce him to give business to the firm. It was never intended to charge him with any loss. Though the Rs. 31,000 odd was debited to Sinha for the purpose of adjusting the books, no interest was charged, and the shares unsold were credited to the firm and not to him Throughout 1930 and 1931 the firm did fatka business both for Sassoon & Co. and for themselves, and in 1931 for Abraham, and in jute and hessian as well as linseed. These were never shown in the sawda book, but they appear in the linseed fatka book (Ex. A), and the rest appear in the jute and hessian fatka book which the prosecution have suppressed. A private telephone connexion was maintained with the firm of Gopiram Murrarka for fatka business. The payment of Rs. 2,751 was made in cash to Gopiram, an open cheque for the money was signed by Giridharilal, and the payment was debited to the firm. In 1931 all the partners agreed that share speculation tied up too much money, and that jute and hessian fatka instead would be done for Abraham's benefit in future. Otherwise none but solid business would be done, such as brokerage. Only the balance on fatka transactions was shown in the cash-book at the end of the year. The loss in 1931 was really more than Rs. 90,000, but this figure was entered in order to correspond with the entry of Rs. 90,000 withdrawn from Sassoon's loan account, as in 1930 the debit was made against Sinha's name. When Giridharilal and Murari were both away from Calcutta, and Sinha could not draw on the firm's account; it was agreed that he should draw money from the loan account in case of emergency. For obvious reasons it would be useless to pay these sums into the firm's account at the Bank. When Giridharilal and Murari went to Benares in December 1931, there were fatka losses to be met, and his partners were aware that Sinha intended to draw on the loan account.

10. On 12th January he returned to this account Rs. 25,000 in cash, out of fatka profits, and paid Abraham Rs. 11,000 odd on 12th December for which a pencil receipt signed, and in his writing, was put in evidence before the Additional Chief Presidency Magistrate. As Abraham was not called and no witness produced this document, the Chief Presidency Magistrate disregarded it. Sinha says that such pencil receipts were always taken from Abraham, and kept for accounting purposes, but they have been suppressed by the prosecution. Out of the Rs. 90,000 drawn from Sassoon and Company, Rs. 78,000 odd was paid out for fatka on the 22nd and 30th December and the 19th January, in addition to the Rs. 11,000 odd paid to Abraham. Counsel on behalf of Sinha desired to give evidence to show how all sums were dealt with by his client, but the Magistrate refused to allow him to do so, on the ground that the case did not, and could not, turn on a question of account. Nevertheless the Magistrate has based his judgment finally on an incomplete account and is convinced that Sinha is guilty, because he failed to account for the whole of the sums withdrawn from the loan, account. According to Sinha the partners met on the 25th January to settle the account for 1931, and the entry of Rs. 90.000 was made, representing the debit balance on fatka transactions for the year. With regard to further claims pending on account of fatka by Kishenlal Gopiram and other firms, Giridhari lal and Murari suggested repudiation and reliance on the defence that they were gambling transactions. Sinha refused, and in order to bolster up this dishonest plea he has been repudiated and prosecuted by his partners. The prosecution admit that he was not turned out of the office until four days after his alleged confession. This trial was unsatisfactory for several reasons. In the first place the charge itself was seriously defective. The essential element, which forms the gist of the offence under Section 405, was omitted, namely, the allegation of entrustment. It is true that such an omission is not fatal if it has not occasioned a failure of justice (Section 225 and other sections of the Criminal P.G.) It is difficult however to say this with any certainty. The omission was not due simply to error. The prosecution were not able, even up to the end of the hearing on appeal, to state with certainty or particularity what was the nature of the entrustment which they sought to charge nor by whom, nor when, such entrustment was made.

11. The difficulty arises owing to the admitted fact of partnership. In In re Lalchand Roy (1868) 9 WRRr 37 the Court held that in a case of partnership the gist of the offence of criminal breach of trust, viz., dishonest misappropriation, is wholly wanting, the accused being a part owner of the property. But it was decided by a Pull Bench in Queen v. Okhoy Coomar Shaw (1874) 13 Beng LR 307 that the words of Section 405 are large enough to include the case of a partner, if it be proved that he was in fact entrusted with the partnership property, or with dominion over it, and has dishonestly misappropriated it, or converted it to his own use, and this decision has bean followed, without further discussion, in some other cases. We have no doubt that it is correct so far as it goes, but no indication is given in the judgment, to show how, or in what circumstances, a partner can be said to have been entrusted with partnership property, or with dominion over it, or to have misappropriated or converted it, and it is difficult to conceive how such a situation could arise The learned Judges did not decide that such a situation had arisen in that case, but only that if it did arise on appropriate facts, then the section was wide enough to cover it. A partner who receives money belonging to the partnership on account of himself and his co-partners, does not do so in a fiduciary capacity: Piddoke v. Burt (1894) 1 Ch 343. No criminal prosecution is sustainable by one partner against another for stealing, or embezzling or obtaining by false pretences, or misappropriating the property of the firm: Lindley on Partnership, Edn. 9, p. 559, and the cases referred to in note (a), especially R. v. Loose (1860) 29 LJM C 132(stealing): R. v. Evans 9 Jur (n s) 184, (false pretences); and R. v. Bren (1861) 9 Cox CC 398(embezzlement). This disability has been removed in England by 31 and 32 Vic. C. 116, now replaced by Section 40(4), Larceny Act 1916, but no similar legislation has been enacted in India.

12. Partners are joint owners or co-owners of the partnership property, that is to say of the common stock: 8. 253(1), Contract Act. Each partner is co-owner of the whole of this common stock, though he receives or pays a share only in profits and losses arising therefrom, and though his share in the partnership property is only the value of his original contribution, increased or diminished by his share of profit or loss. It is difficult therefore to conceive how he can be entrusted with, or with dominion over, his own property, or how he can dishonestly misappropriate it or convert it to his own use. In Emperor v. Jagannath Raghunath Das AIR 1932 Bom 57, Sir John Beaumont, C.J., seems to have realized these difficulties, but held that a partner might be entrusted with dominion over the partnership property. We are unable to appreciate the distinction which he drew. The English cases were not cited to the Court, nor were the incidents arising from the law of partnership discussed in the judgment. Moreover the decision is marred by the fact that the learned Judge's mind seems to have been much affected because the accused himself did not give evidence to rebut the charge, or to show that this intention was honest. It must have escaped the learned Judge's attention that our procedure does not provide the accused with any such opportunity, and to require him to defend himself offends against the fundamental presumption which underlies the administration of the criminal law both here and in England.

13. In the present case, clearly, there was no entrustment of dominion, because the prosecution case is that Sinha acted without authority. The learned Counsel who has appeared for the prosecution has invited us to avoid the difficulty of entrustment by convicting the accused under Section 403. This however would not remove the difficulty arising from the necessary element of dishonest misappropriation or conversion. Even if it were possible dishonestly to misappropriate or convert one's own property, it is clear that in the present case the fatka contracts were made in the name of the firm. Giridharilal and Murari held Sinha out as having authority to make such contracts, and prima facie the firm was liable upon them. It is equally clear that Sinha used the money drawn from the loan account to meet these liabilities. There is no sufficient evidence on the record to enable us to say that these were gambling transactions and void as such. That would depend upon the form of each contract, and the intention of the parties about delivery. Prima facie the contracts were valid and enforceable. In Sections 403 to 409, I.P.C., which deal with criminal misappropriation and criminal breach of trust, many classes of persons are specifically mentioned, but no reference is made to partners, either in the sections or in the numerous illustrations thereto. The latter refer to persons entrusted absolutely with property of another, and not to property which belongs either partly or wholly to the accused. This alone affords striking confirmation of the view, that the sections are not intended to apply to partners.

14. Another unsatisfactory aspect of this trial was, that the principal witnesses for the prosecution were not heard by the Chief Presidency Magistrate who convicted the accused. The trial commenced before the Additional Chief Presidency Magistrate on 25th February 1932. After the whole of the witnesses for the prosecution had been examined-in-chief, charges framed, cross-examination practically concluded, and the trial, after numerous adjournments, had extended to 1st June 1932, the complainant Giridharilal was absent on account of illness. At the previous hearing he had been severely pressed in cross-examination, and had been compelled to make admissions, which largely discounted, if they did not destroy entirely, his reliability as a witness of truth. The trial was adjourned for a week, when the complainant filed a petition under Section 526, Criminal P.C., asking for an adjournment to enable him to apply for transfer. No reasons were given, or even suggested, for this sudden desire to have the case tried by another Magistrate. Meanwhile the Magistrate heard something about the complainant, which made him unwilling to try the case further, and he requested the Chief Presidency Magistrate to transfer it to his file. Thereafter the Chief Presidency Magistrate asked the accused whether he claimed a trial de novo. His counsel was thus placed in a dilemma. Either he had to pursue the futile task of cross-examining all the witnesses over again well primed as they would be after their previous experiences, or he had to let the Magistrate decide the case without hearing the principal witnesses for the prosecution. Such was the Gilbertian situation created, and such is the embarrassment which the complainant is able to inflict upon the accused by means of this iniquitous section, which still disfigures the Code, though some of its worst features have been removed recently by amendment.

15. Such a trial cannot be satisfactory, nor for similar reasons can a new trial repair the damage. We are not unmindful that similar results follow from necessary transfers of Judges and Magistrates. The remedy is to reduce their number to those which deal alone renders unavoidable, provided that in every other case the Judge or Magistrate shall complete all pending trials before his transfer, and confine Section 528 to transfers made before the commencement of a trial. Another unsatisfactory feature of the case was the omission to call Abraham as a witness. He was in Calcutta and available throughout; the trial. His evidence would have disposed of the case one way or the other and would have cleared up much that has been left obscure. If both the prosecution and the defence were unwilling to call him, the Magistrate ought to have examined him.

16. In conclusion we observe that neither party came to Court with clean hands. Both were quite ready to corrupt Abraham in order dishonestly to obtain favours from his firm. The onus lies upon the prosecution and the proof in this case depends mainly upon the evidence of Giridharilal. We cannot rely upon his evidence and in our opinion the onus has not been discharged. Consequently and for all these reasons, this conviction cannot stand, and we set it aside and acquit the accused.

McNair, J.

17. I agree.

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