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S.A.Q. Hashmi Vs. the State and anr. - Court Judgment

LegalCrystal Citation
SubjectCriminal
CourtKolkata High Court
Decided On
Judge
Reported in1980CriLJ1030
AppellantS.A.Q. Hashmi
RespondentThe State and anr.
Cases Referred(Velji Raghavji Patel v. State of Maharastra). It
Excerpt:
- .....is interested in the whole of the partnership assets and there cannot be an entrustment of 'a partner's property' as such by one partner to another, because there is no 'property' which can be entrusted.5. relying on this decision mr. banerjee with much emphasis contends that in this particular case from the terms of the partnership deed, there is nothing to show that there was a special agreement between the parties by which the accused was entrusted with the property or dominion over the partnership property. that being so, the complainant, who is no other then the other partner of the firm cannot proceed criminally against the other partner under section 409 of the indian penal code.6. mr. niharendu dutta majumdar, learned advocate appearing on behalf of the opposite party no. 2,.....
Judgment:
ORDER

N.C. Mukherji, J.

1. This rule arises on an application under Section 482 of the Cr.P.C. and is for quashing of criminal proceeding in Case No. C 1398 of 1979 pending before the Metropolitan Magistrate, 17th Court, Calcutta including the order dated 3-8-1979 issuing summons against the petitioner under Section 409 of the I.P.C.

2. On 3-8-1979 a.complaint was filed by the opposite party No. 2 describing him as a partner in respect of the business of Customs Clearing and Forwarding Agent etc. in the name and style of M/s. New India Corporation. It is alleged by the complainant that since the early part of 1078 the petitioner behaved in a manner prejudicial to the interest of the firm and the complainant and three instances were stated as overt acts constituting the offence under Section 409 of the I.P.C. After examining the complainant and the two other witnesses the learned Chief Metropolitan Magistrate by the order dated 3rd Aug. 1979 summoned the petitioner under Section 409 of the I.P.C. It is against this order issuing summons that the petitioner has come up to this Court.

3. Mr. N.C. Banerjee, learned Advocate appearing on behalf of the petitioner, places the petition of complaint, which was filed in the Court of the learned Chief Metropolitan Magistrate. He also places before me the partnership deed and the statements of the complainant and his two witnesses. Mr. Banerjee contends that the law is well settled that one partner cannot proceed against another partner on a charge of criminal breach of trust. Since the concept of a 'fiduciary relationship' cannot be said to exist in relation to property owned by the partnership firm and as one partner has as much right to the partnership property as any other partner, the partner holds the property in his own right and not in a fiduciary capacity.

4. In support of his contention Mr. Banerjee first refers to a Full Bench decision of this Court reported in : AIR1951Cal69 (Bhuban Mohan Das v. Surendra Mohan Das). In this case it has been held that a charge under Section 406, Penal Code cannot be framed against a person who, according to the complainant, is a partner, with him and is accused of the offence in respect of property belonging to both of them as partners. their lordships were considering the decision reported in AIR 1940 Cal 371 : 41 Cri LJ 796 and came to the conclusion that the said decision would not be regarded as correctly decided. It was further held that the cases may be regarded as rightly decided if they are confined to cases where under special agreements made between the parties entrustment of the property or dominion over it was given to any particular partners. P.B. Mukharji, J., delivering a separate judgment held as follows:

The reason for holding that a patnr. cannot be prosecuted by another patnr. for criminal breach of trust in respect of partnership property under Section 406, Penal Code, is twofold. The nature, character & incidents of partnership property are such that during the sub-sistence of the partnership there cannot be, except by special agreement any entrustment or dominion & secondly partnership property is not a specific & ascertainable property & is of so equivocal & problematic a nature until dissolution & accounts, that it is not susceptible to be used in a manner which can bring into operation Section 405, Penal Code. It is only when such ordinary character & nature of the partnership property are varied by special contract of partnership so as to create entrustment of any specific property in favour of one partner, as against the others or so as to give exclusive dominion of such property to one partner as against the other that there can be any scope of application of Section 405, Penal Code.

Banerjee, J. in a separate judgment amongst others held:

Unless there is an agreement between the partners that a particular property would be the separate property of a partner there cannot be an entrustment of it to the other patnr. or patnrs. In the absence of such an agreement each patnr. is interested in the whole of the partnership assets and there cannot be an entrustment of 'a partner's property' as such by one partner to another, because there is no 'property' which can be entrusted.

5. Relying on this decision Mr. Banerjee with much emphasis contends that in this particular case from the terms of the partnership deed, there is nothing to show that there was a special agreement between the parties by which the accused was entrusted with the property or dominion over the partnership property. that being so, the complainant, who is no other then the other partner of the firm cannot proceed criminally against the other partner under Section 409 of the Indian Penal Code.

6. Mr. Niharendu Dutta Majumdar, learned Advocate appearing on behalf of the opposite party No. 2, refers to Sections 9, 13, 15 and 18 of the Partnership Act and contends that from the allegations made in the petition of complaint it will appear that the accused violated the provisions of those sections of the Partnership Act as well as some provisions of the Contract Act and that being so, there is no reason why the accused cannot be prosecuted criminally by the other partner. Mr. Dutta Majumdar, also, submits that the application filed by the petitioner in this Court is premature as the learned Magistrate on the statements of the complainant and his two witnesses was prima facie satisfied that the petition of complaint disclosed a case against the accused and as such summoned the accused person under Section 409 of the I.P.C. The real facts will transpire at the time when the complainant will examine his witnesses. If the complainant at that point of time fails to prove that the accused was not entrusted with the dominion over the property then the complainant's case will fail. But simply because in the partnership deed there is no term showing that the accused by special agreement was entrusted with the dominion over the property it cannot be said that one partner cannot bring a criminal case against the other partner.

7. On going through the statements of the partnership deed carefully I find that there is no special agreement by which the accused was entrusted with the dominion over the partnership property. The complainant states that in early part of 1978 he came to know that the accused in breach of trust and confidence reposed in him had been secreting away the funds payable to the partnership firm and that he had been wrongfully misappropriating the same keeping the complainant in the dark. He further submits that the accused did not deposit the amount paid to the firm by cheques in the bank nor did he account for the same in the books of account of the partners. The statements of the other two witnesses are not very much relevant for our present purpose.

8. Thus it is seen that it has not been stated either by the complainant or his witness that there was any special contract by which the accused was entrusted with the dominion over the partnership property.

9. The Full Bench decision of the Calcutta High Court was accepted as correct by the Supreme Court in : 1965CriLJ431 (Velji Raghavji Patel v. State of Maharastra). It has been held:

Before a person can be said to have committed criminal breach of trust within the meaning of Section 405, I.P.C. it must be established that he was either entrusted with or entrusted with dominion over property which he is said to (have converted to his own use. In order to establish 'entrustment of dominion' over property to an accused person the mere existence of that person's dominion over property is not enough. It must be further shown that his dominion was the result of entrustment.

In the case of a partnership, every partner has dominion over the partnership property by reason of the fact that he is a partner. This is a kind of dominion which every owner of property has over his property. But it is not dominion of this kind which satisfies the requirement of Section 405. The prosecution must further establish that dominion over the assets or a particular asset of the partnership was, by a special agreement between the parties, entrusted to the acmised person. If in the absence of such a special agreement a partner receives money belonging to the partnership he cannot be said to have received it in a fiduciary capacity or, in other words, cannot be held to have been 'entrusted' with dominion over partnership properties.

Their lordships have further held;

Where, therefore, under an agreement between the partners the working partner is authorised to recover the dues of the partnership and to spend the money for the business of the partnership, he cannot be said to have been guilty of criminal breach of trust even with respect to the dues realised by him from certain person by not depositing them in the bank as alleged by the prosecution.

Mr. Dutta Majumdar submits that the facts of the case before the Calcutta Full Bench and the Supreme Court are entirely different from the facts of the present case. We are not very much concerned with the facts of the cases before the Full Bench of this Court and the Supreme Court and the facts of the present case. We are more concerned with the legal position as enumerated by the Full Bench which was accepted by the Supreme Court.

10. The only point that has been laid down by the Full Bench and by the Supreme Court that ordinarily a partner cannot institute a criminal proceeding for criminal breach of trust of partnership property against another partner unless it can be shown that by a special contract the accused was entrusted with the dominion over the property and in breach of such entrustment he has misappropriated the money. As has been stated earlier, there is absolutely nothing to ehow in this case that there was any special contract. In the absence of such special contract, I am in full agreement with Mr. Banerjee that this criminal case which has been brought by one partner against another, cannot go on.

11. In the result, this application succeeds and the rule is made absolute. The proceeding before the Magistrate is quashed. The accused is discharged from bail bond.

12. Leave to appeal to the Supreme Court was prayed verbally and the same is refused.


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