Guha Ray, J.
1. The two petitioners Rameswar Tantia and Gobardhandas Binani, the General Secretary and the Vice-President, respectively, of the Marwari Relief Society which is a society incorporated under the Indian Companies Act of 1913 were convicted Under Section 282 B of the Indian Companies Act and sentenced each to pay a fine of Rs. 25/- each or in default to simple imprisonment for a week,
2. The case for the prosecution briefly is that the complainant Mahabir Prasad Surekha, was appointed a salesman under the Rasayansala Department of the Society under Ex. 3 which is dated the 23-4-1953. One of the terms of this appointment was that the employee will have to deposit a cash security of Rs. 500/- on which he was to get 6 per cent. annual interest so long as the amount Would be kept in deposit with the Society and so long as the employee would continue in the service of the Society. Towards the end of the letter of appointment occurs the following paragraph.
You will do only Society's work under orders from the office and you will not do any part time work etc. Otherwise Society will have the right to dissociate you without any previous notice and not pay you any sort of compensation. In such event Society will realise the loss done by you from you.
3. On the 18-2-1955, the complainant was dismissed by the Society. It also appears from Ex. 1 which is a letter from the Attorney of the Society to the complainant that the Society was claiming certain amounts from the complainant on account of his having sold medicines etc. and misappropriated the sale-proceeds. In the letter occurs the following sentence.
These facts having come to our clients' knowledge, they terminated your service by notice in writing dated 13-2-55 and called upon you to pay the sum of Rs. 1,228/15/6 which according to our clients then appeared to be due after adjusting your salary amount as also the sum of Rs. 500/- deposited by you as cash security as one of the conditions of service.
4. The complainant also demanded from the Society certain amounts including the money he deposited as cash security and the allegation against the Society is that it has not kept the complainant's cash security in any special account of any scheduled bank as enjoined by Section 282 B of the Indian Companies Act, The defence was a plea of not guilty. Several contentions were raised on behalf of the defence and they will appear from the judgment as I proceed.
5. It is clear from the terms of employment that the complainant was engaged as a salesman on the terms laid down in Ex. 3 and the letter of appointment is dated the 23-4-1953, It is the complainant's case that he deposited Rs. 500/- as cash security in five one-hundered rupee notes but he was not granted any receipt by the Society, The defence on the other hand is that the money was not actually paid by the complainant but by D.W. 1 Purushottamdas Kajriwall who happened to be a close relation of the complainant and although the amount was ultimately transferred to the account of the complainant it was not a deposit made by the complainant so as to bring the Society or any of its Directors or Officers within the mischief of Section 282B of the Indian Companies Act. The learned Magistrate appears to have held that the complainant deposited the money in cash. Of course he has not said so clearly because he has not said anywhere clearly that he disbelieved the evidence of D. W. 1 who says that the complainant's deposit was supplied by his Firm Bengal Mill Agency as he was asked to deposit this amount by the complainant and he did so in his name. Assuming for arguments' sake that what this witness says is true it follows that what he gave was merely a loan of Rs. 500/- to the complainant and the money was ultimately transferred to the name of the complainant. That this was treated by the Society as deposit of cash security is clear from Ex 1, the letter of the Attorney of the Society to the complainant. Although therefore, initially the amount might have come from D. W. 1 that was merely a loan by D. W. 1 to the complainant and as far as the deposit to the Society is concerned that deposit is one which must be held to have been made by the complainant himself from the money he received from D. W. 1 as a loan. That being so, there could be little doubt that the money was deposited by the complainant as cash security in terms of his agreement.
6. It was next argued on behalf of the defence before the trial Court and also . before me that this amount was not really a cash security but was merely a loan to the Society by the complainant as it carried interest at the rate of 6 per cent, per annum. The mere fact that the amount carried interest at the rate of 6 per cent, would not make it a loan. Of course in clear terms the letter of appointment, does not say that any loss to Which the complainant might put, the Society would be recouped from the security deposit and from the absence of such a term in the letter of appointment it is argued by Mr. Sen that the deposit would amount to a loan and not to a deposit of cash security. There is however, the sentence to which I have already referred that in such events the Society will realise the loss sustained by it from the complainant. The context in which this sentence occurs clearly means that in the event of the Society 'dissociating the complainant without any previous notice' the Society will recoup any loss sustained by it from the complainant and although there is no clear mention here of the loss being recouped from the money deposited, if the letter of appointment be read as a whole there is little room for doubt that any loss the Society might sustain as a result of the activities of the complainant would be recouped from the money deposited by him so as to convert this money into a security deposit. As a matter of fact, Ex. 1 clearly admits that this deposit made by the complainant was treated as a security deposit.
7. Mr. Sen next argued that under Section 282 B there is an obligation on the Society to keep the money etc., deposited by an employee in pursuance of his contract of service with the company, only when the money is security deposit and not in any other case and as in this case the amount was not a security deposit there was no such obligation on the Society. As I have already found that the amount deposited by the complainant was a security deposit the very basis of this argument is knocked out. Assuming however, for argument's sake that it did not amount to a security deposit this Section 282 B is couched in such general terms that there would be an obligation on a company to keep in a special account of a schedule bank all moneys or securities deposited with a company by its employee in pursuance of his contract of service. Mr. Sen argues that the last sentence of Section 282 B (1) that 'no portion thereof shall be utilised by the company except for the purposes agreed to in the contract of service' would go to show that the money kept in deposit as contemplated by this sub-section must be a security deposit. I find it impossible to agree with this contention. Section 282 B (1) consists of two Darts, the first part places on the company an obligation to keep all moneys or securities deposited with the company by its employees in pursuance of their contract of service, with the company, in a special account in a scheduled bank, the second portion prohibits the utilisation of any such deposit except for the purposes agreed to in the contract of service and has really nothing to do with the first part. The first imposes an obligation and the second imposes another obligation by a prohibition and this prohibition does not necessarily mean that the money must be a security deposit. As a matter of fact, if it was intended that the money must be a security denosit there is no reason whatever why the legislature did not say so in express terms. The obvious intention behind the provisions of this section is that whatever money may be deposited by an employee in pursuance of his contract of service with the company must be kept in a special manner and it must not be spent except for the purposes agreed to in the contract, of service. The evil this section is intended to combat is the indiscriminate use to which such deposits are ant to he put by different companies and that, being so there is no reason what-ever why the expression ' all moneys or securities' should be read as being limited to moneys or securities deposited as cash security to the company by the employee. That disposes of the first part of Mr. Sen's contention.
8. Mr. Sen next argues that the petitioners did not wilfully contravene the provisions of Section 282B(1) so as to come within the mischief of Sub-section (5). His contention first is that these two petitioners are not Directors of the Society be-cause under Article 26 of the Articles of Association Ex. 11 they are merely to be deemed to be Directors of the Society and not that they were actual Directors. The second contention is that there is nothing in the evidence or in the record to indicate that they contravened the provisions of Section 282 B (1) knowingly. Under Article 26 of the Articles of Association Ex. 11, the President, the Vice-Presidents and the General Secretary for the time being shall be deemed to be the Directors of the Society but they shall have no powers except as are expressly stated in these Articles. , It appears from the Articles of Association that the Society had no Directors at all. It had an Executive Committee consisting of not more than 35 and not less 25 members. The members under Article 3 of the Articles of Association were classified as life members, honorary members and ordinary members. Out of 25 or 35 members of the Executive Committee, there were only 4 Directors, viz. The President, two Vice-Presidents and the General Secretary, the rest were mere members of the Executive Committee. I have already stated that petitioner No. 1. was the Secretary and petitioner No. 2 was the President, According to the evidence the first was the General Secretary of the Marwari Relief Society in 1953-54 and he was the General Secretary when the deposit in question was made. According to the evidence of P. W. 4 who was the Vice-President of the Society in 1955-56, the petitioner No. 2 Gobardhan Das Binani was the Vice-President of the Marwari Relief Society in 1953-54. The General Secretary and the Vice-President were both Ex-officio Directors of the Society under Article 26 of the Articles of Association. It was the Executive Committee which according to the evidence of P. W. 5 decided on the policy of keeping the security deposits in the Society instead of in any bank. It was the evidence of this witness further that for the last 40 years during which he was associated with the Society it was the general policy of the Committee that the security money would be kept with the Rashayansala department of the Society. It is therefore obvious that the Marwari Relief Society has been doing this for the last 40 years or so and the two petitioners merely continued a policy which the Society had been following long before their time. Evidently there-tore, the Society was disregarding the provisions of Section 282 B of the Indian Companies Act for a long time and the members of the Executive Committee of which the petitioners were two must have known that this was being done by the Society all along. The provisions therefore of Section 282 B must have been contravened knowingly by the members of the Executive Committee and the petitioners were two of the members of the Executive Committee 1n 1953-54. That being so the learned Magistrate rightly held that these petitioners knowingly contravened the provisions of Section 282 B (1).
9. Mr. Sen finally contends that as the trial was held after the amended Criminal Procedure Code came into force it was the duty of the learned Magistrate according to the English practice to tell the petitioners that they had a right to examine themselves as witnesses and as he did not do so the case should be sent back in order to enable the accused to examine themselves as witnesses in the case. Section 342A which is the relevant section nowhere imposes upon the Magistrate the duty of explaining to an accused person after the amendment came into force that he might examine himself if he chose and it is no use referring to English practices. If the section does not impose any obligation on the Magistrate to explain to the accused what right he has or he has not there is no reason why because the accused did not choose to examine himself as a witness the case should be sent back. After all it may reasonably be supposed that the case of the petitioners was in competent hands and if the petitioners did not choose to examine themselves as witnesses for the defence they must have done so deliberately.
10. Mr. Sen then argues that the learned Magistrate nowhere put to the petitioners in their examination under Section 342, Cr. P. C., the question that he wanted to draw an inference as regards their knowledge of the contravention of the requirements of Section 282 B (1) from the fact that they were members of the Executive Committee and that the one or the other signed the balance-sheet of the Kashayansala Department of the Society, It is undoubtedly true, that no such questions were put to any of the petitioners but that omission to my mind could not possibly have caused any prejudice to the petitioners and these were facts proved by the evidence and it was open to the learned Magistrate to draw any legitimate inference he could from them. The mere fact that the petitioners were members of the Executive Committee which for a number of years followed the policy of keeping deposits of employees not in any special account of a scheduled bank but in the Society itself entitled one to infer from that alone that the petitioners must have known that the moneys were not being kept in a special account in a scheduled bank but were kept in the Society in contravention of the provisions of Section 282 B (1) of the Indian Companies Act of 1913. That being so, they were rightly convicted. The sentence is far from too severe.
11. The result then is that the petition is dismissed and the Rule discharged.