Jaikrishnadas Manohardas Desai v State of Bombay 1960

Case – Jaikrishnadas Manohardas Desai v. State of Bombay, 1960

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J.C. SHAH, J. – At a trial held with the aid of a common jury in Case No. 38 of the V Session
1955 before the Additional Sessions Judge, City Court, Greater Bombay, the two appellants
were convicted of offences under Section 409 read with Section 34 of the Indian Penal Code.
The Additional Sessions Judge sentenced the first appellant to suffer rigorous imprisonment
for five years and the second appellant to suffer rigorous imprisonment for four years. In
appeal, the High Court of Bombay reviewed the evidence, because in the view of the Court,
the verdict of the jury was vitiated on account of a misdirection on a matter of substantial
importance, but held that the conviction of the two appellants for the offence under Section
409 read with Section 34 of the Indian Penal Code was, on the evidence, not liable to be set
aside. The High Court accordingly confirmed the conviction of the two appellants but
reduced the sentence passed upon the first appellant to rigorous imprisonment for three
years and the sentence against the second appellant to rigorous imprisonment for one year.
Against the order of conviction and sentence, the appellants have appealed to this court
with special leave.

2. The facts which gave rise to the charge against the two appellants are briefly these:
   On 15-6-1948, the Textile Commissioner invited tenders for dyeing Pugree Cloth. The
   Parikh Dyeing and Printing Mills Ltd., Bombay – hereinafter to be referred to as “the
   company” – of which the first appellant was the Managing Director and the second appellant
   was a Director and technical expert, submitted a tender which was accepted on 27-7-1948,
   subject to certain general and special conditions. Pursuant to the contract, 2,51,05 ¾ yards
   of cloth were supplied to the company for dyeing. The company failed to dye the cloth
   within the stipulated period and there was correspondence in that behalf between the
   company and the Textile Commissioner. Approximately 1,11,000 yards out of the cloth were
   dyed and delivered to the Textile Commissioner. On 25-3-1950, the company requested the
   Textile Commissioner to cancel the contract and by his letter dated 3-4-1950, the Textile
   Commissioner complied with the request, and cancelled the contract in respect of 96,128
   yards. On 20-11-1950, the contract was cancelled by the Textile Commissioner in respect of
   the balance of cloth and the company was called upon to give an account without any
   further delay of the balance undelivered and it was informed that it would be held
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   responsible for “material spoiled or not accounted for”. On December 4, 1950, the company
   sent a statement of account setting out the quantity of cloth actually delivered for dyeing,
   the quantity of cloth returned duly dyed and the balance of cloth viz. 1,32,160 yards
   remaining to be delivered. Against the cloth admitted by the company remaining to be
   delivered, it claimed a wastage allowance of 2412 yards and admitted liability to deliver
   1,29,748 yards lying with it on Government account.
3. It appears that about this time, the company was in financial difficulties. In December
   1950, the first appellant left Bombay to take up the management of a factory in Ahmedabad
   and the affairs of the company were managed by one R.K. Patel. In June 1952, an application
   for adjudicating the two appellants insolvents was filed in the Insolvency Court at
   Ahmedabad. An insolvency notice was also taken out against the two appellants at the
   instance of another creditor in the High Court at Bombay. Proceedings for winding up the
   company were commenced in the High Court at Bombay. In the meantime, the mortgagee
   of the machinery and factory of the company had entered into possession under a covenant
   reserved in that behalf, of the premises of the factory of the company.
4. The Textile Commissioner made attempts to recover the cloth remaining undelivered
   by the company. A letter was posted by the Textile Commissioner on 16-4-1952, calling upon
   the company to deliver 51,756 yards of cloth lying with it in bleached condition to the Chief
   Ordnance Officer, Ordnance Depot, Sewri, but the letter was returned undelivered. It was
   ultimately served with the help of the police on the second appellant in October 1952.
   Thereafter on 7-11-1952, another letter was addressed to the company and the same was
   served on the second appellant on 25-11-1952. By this letter, the company was reminded
   that 1,35,726¾ yards of cloth were lying with it on account of the Government and the same
   had to be accounted for, and that the instructions to deliver 51,756 yards to the Chief
   Ordnance Officer, Ordnance Depot, Sewri, had not been attended to. The Textile
   Commissioner called upon the company to send its representatives to “clarify the position”
   and to account for the material. After receiving this letter, the second appellant attended at
   the office of the Textile Commissioner and on 27-11-1952, wrote a letter stating that “the
   main factors involved in not delivering the goods in finished state was that the material was
   very old”, was “dhobi-bleached in different lots”, was “bleached under different conditions
   and therefore unsuitable for vat colour dyeing in heavy shades”, that it varied in length,
   weight, and finish and had “lost affinity for vat colour dyeing”. It was also stated that the
   company had in dyeing the basic material, suffered “huge losses” estimated at Rs 40,000. It
   was then stated: “We are, therefore, however prepared to cooperate with the Government
   and are willing to make good the government’s bare cost. Please let us know the detail and
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   the actual amount to be deposited so that we may do so at an early date. We shall thank you
   if we are given an appointment to discuss the matter as regards the final amount with
   respect to the balance quantity of the basic material.”
5. On December 29,1952, the premises of the company and the place of residence of the
   appellants were raided, but no trace of the cloth was found. A complaint was then filed with
   the police charging the two appellants with criminal breach of trust in respect of 1,32,404½
   yards of cloth belonging to the Government.
6. There is no dispute that approximately 1,30,000 yards out of the cloth entrusted to
   the company by the Textile Commissioner for dyeing has not been returned. By its letter
   dated December 4, 1950, the company admitted liability to deliver 1,29,748 yards of cloth,
   but this cloth has not been returned to the Textile Commissioner in spite of repeated
   demands. That the appellants, as Directors of the company had dominion over that cloth
   was not questioned in the trial court. The plea that there were other Directorsof the
   company besides the appellants who had dominion over the cloth has been negatived by the
   High Court and in our judgment rightly. Direct evidence to establish misappropriation of the
   cloth over which the appellants had dominion is undoubtedly lacking, but to establish a
   charge of criminal breach of trust, the prosecution is not obliged to prove the precise mode
   of conversion, misappropriation or misapplication by the accused of the property entrusted
   to him or over which he has dominion. The principal ingredient of the offence being
   dishonest misappropriation or conversion which may not ordinarily be a matter of direct
   proof, entrustment of property and failure in breach of an obligation to account for the
   property entrusted, if proved, may in the light of other circumstances, justifiably lead to an
   inference of dishonest misappropriation or conversion. Conviction of a person for the
   offence of criminal breach of trust may not, in all cases, be founded merely on his failure to
   account for the property entrusted to him, or over which he has dominion, even when a
   duty to account is imposed upon him, but where he is unable to account or renders an
   explanation for his failure to account which is untrue, an inference of misappropriation with
   dishonest intent may readily be made.
7. In this case, on a search of the factory on December 29, 1952, the cloth remaining to
   be delivered by the company was not found. At the trial, the appellants sought to explain
   the disappearance of the cloth from the factory premises where it was stored, on the plea
   that it was old and was eaten up by white-ants and moths, and had been thrown away as
   rubbish. This plea of the appellants was not accepted by the High Court and we think rightly.
   No information was given at any time to the Textile Commissioner after December 4, 1950,
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   that the cloth had been eaten up by white-ants and moths, and was therefore thrown away
   or otherwise destroyed. Nor was any evidence led in support of the plea by the appellants.
8. In this court, counsel for the first appellant contended that failure to return the cloth
   may give rise to a civil liability to make good the loss occasioned thereby, but in the
   circumstances of the case, the first appellant cannot be found guilty of the offence of
   criminal breach of trust. Counsel submitted that the first appellant had left Bombay in 1950
   and had settled down in Ahmedabad and was attending to a State of Bombayfactory in that
   town, that thereafter the first appellant was involved in insolvency proceedings and was
   unable to attend to the affairs of the company in Bombay, and if, on account of the preoccupation of the first appellant at Ahmedabad, he was unable to visit Bombay and the
   goods were lost, no criminal misappropriation can be attributed to him. But the case
   pleaded by the appellant negatives this submission. The first appellant in his statement
   before the trial court admitted that he often went to Bombay even after he had migrated to
   Ahmedabad and that he visited the mill premises and got the same opened by the Gurkha
   watchman and he found that the heap of cloth lying in the mill was getting smaller every
   time he visited the mill and on inquiry, he was told by the watchman that every day one
   basketful of sweepings was thrown away. He also stated that he was shown several places in
   the compound of the factory where pits had been filled up with these sweepings, and that
   he found a small heap lying by the side of the “Tulsipipe gutter” and also in the warehouses
   in the mill premises. It is clear from this statement and other evidence on the record that
   even after he migrated to Ahmedabad, the first appellant was frequently visiting the factory
   at Bombay. The evidence also discloses that meetings of Directors were held from time to
   time, but the minutes of the Directors’ meetings have not been produced. The books of
   account of the company evidencing disbursements to the Directors of remuneration for
   attending the meetings and the expenses for the alleged collection and throwing away of
   the sweepings have not been produced. It is admitted by the first appellant that the letter
   dated 27-11-1952, was written by the second appellant under his instructions. In his
   statement at the trial, the first appellant stated that he was informed of the letter dated 26-
   11-1952, from the Textile Commissioner and that he could not attend the office of that
   officer because he is attending to the insolvency proceedings and that he deputed the
   second appellant to attend the office and to explain and discuss the position. He then stated,
   “We had informed the Commissioner that the company was prepared to pay for the cloth
   remaining after deducting the amount claimed as damages”. The letter dated 27-11-1952,
   was evidently written under the direction of the first appellant and by that letter, liability to
   pay for the cloth after certain adjustments for losses alleged to be suffered by the company
   in carrying out the contract was admitted. By the letter dated December 4, 1950, liability to
   deliver the cloth was admitted and by the letter dated 27-11-1952, liability to pay
   compensation for the loss occasioned to the Government was affirmed. The appellants who
   were liable to account for the cloth over which they had dominion have failed to do so, and
   they have rendered a false explanation for their failure to account. The High Court was of
   the opinion that this false defence viewed in the light of failure to produce the books of
   account, the stock register and the complete absence of reference in the correspondence
   with the Textile Commissioner about the cause of disappearance established
   misappropriation with criminal intent.
9. Counsel for the first appellant contended that probably the goods passed into the
   possession of the mortgagees of the assets of the company, but on this part of the
   submission, no evidence was led in the trial court. Counsel for the first appellant, relying
   upon the observations in Shreekantiah Ramayya Munipalli v. State of Bombay[(1955) 1 SCR
   1177] also contended that in any event, a charge under Section 409 read with Section 34 of
   the Indian Penal Code cannot be established against the first appellant unless it is shown
   that at the time of misappropriation of the goods, the first appellant was physically present.
   But the essence of liability under Section 34 is to be found in the existence of a common
   intention animating the offenders leading to the doing of a criminal act in furtherance of the
   common intention and presence of the offender sought to be rendered liable under Section
   34 is not, on the words of the statute, one of the conditions of its applicability. As explained
   by Lord Sumner in BarendraKumar Ghose v. King-Emperor [AIR 1925 PC 1, 7] the leading
   feature of Section 34 of the Indian Penal Code is “participation” in action. To establish joint
   responsibility for an offence, it must of course be established that a criminal act was done by
   several persons; the participation must be in doing the act, not merely in its planning. A
   common intention – a meeting of minds – to commit an offence and participation in the
   commission of the offence in furtherance of that common intention invite the application of
   Section 34. But this participation need not in all cases be by physical presence. In offences
   involving physical violence, normally presence at the scene of offence of the offenders
   sought to be rendered liable on the principle of joint liability may be necessary, but such is
   not the case in respect of other offences where the offence consists of diverse acts which
   may be done at different times and places. In Shreekantiahcase, misappropriation was
   committed by removing goods from a Government depot and on the occasion of the
   removal of the goods, the first accused was not present. It was therefore doubtful whether
   he had participated in the commission of the offence, and this Court in those circumstances
   held that participation by the first accused was not established. The observations in
   Shreekantiahcase in so far as they deal with Section 34 of the Indian Penal Code must, in our
10. judgment, be read in the light of the facts established and are not intended to lay down a
11. principle of universal application.
12. The High Court has found that the two appellants were liable to account for the cloth
    over which they had dominion and they failed to account for the same and therefore each
    had committed the offence of criminal breach of trust. The High Court observed: “In such a
    case, if Accused 1 and 2 (Appellants 1 and 2) alone were concerned with the receipt of the
    goods, if they were dealing with the goods all the time, if they were receiving
    communications from the Textile Commissioner’s office and sending replies to them, and if
    the part played by each of them is apparent from the manner in which they are shown to
    have dealt with this contract, then it is a case of two persons entrusted with the goods and a
    breach of trust obviously being committed by both of them”.
13. It was submitted that the High Court erred in finding the appellants guilty of offences
    under Section 409 of the Indian Penal Code when the charge framed against them was one
    under Section 409 read with Section 34 of the Indian Penal Code. A charge framed against
    the accused person, referring to Section 34 is but a convenient form of giving notice to him
    that the principle of joint liability is sought to be invoked. Section 34 does not create an
    offence; it merely enunciates a principle of joint liability for criminal acts done in furtherance
    of the common intention of the offenders. Conviction of an accused person recorded, relying
    upon the principle of joint liability, is therefore for the offence committed in furtherance of
    the common intention and if the reasons for conviction establish that the accused was
    convicted for an offence committed in furtherance of the common intention of himself and
    others, a reference in the order recording conviction to Section 34 of the Indian Penal Code
    may appear to be a surplusage. The order of the High Court recording the conviction of the
    appellants for the offence under Section 409 of the Indian Penal Code is therefore not illegal.
14. It was submitted for the first appellant that the sentence passed against him was
    unduly severe, and that in any event, no distinction should have been made between him
    and the second appellant in the matter of sentence. It is evident on the findings accepted by
    us that property of considerable value has been misappropriated by the first appellant. He
    was the Managing Director of the company and primarily, he had dominion over the
    property entrusted to the company. The second appellant was, though a Director, essentially
    a technician. Having regard to these circumstances, if the High Court has made a distinction
    between the two appellants, we ought not to interfere with the sentence, which by itself
    cannot be said to be excessive. The appeal fails and is dismissed.