Full Judgment Text
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PETITIONER:
DEBABRATA GUPTA
Vs.
RESPONDENT:
S. K. GHOSH
DATE OF JUDGMENT:
23/02/1970
BENCH:
ACT:
Indian Penal Code Section 406-Criminal breach of
trus--Ingredients necessary-Proof of entrustment.
HEADNOTE:
Certain disputes arose between the appellant and the
respondent who were partners in a firm. After the
respondent had sent to the appellant a notice for
dissolution of the partnership, the appellant withdrew
certain funds from the firm account. The respondent
thereafter lodged a complaint against the appellant alleging
criminal breach of trust within the meaning of Section 406
I.P.C. He also instituted a suit for the, dissolution of the
partnership and for accounts. The. Additional Chief Presi-
dency Magistrate issued summons to the appellant under
Section 406. The appellant instituted proceedings in the
High Court for quashing the criminal proceedings but the
High Court rejected his prayer.
On appeal to this Court,
HELD: Dismissing the appeal:
The offence of criminal breach of ’trust under section
406 of the Indian Penal Code is not in respect of property
belonging to the partnership but is an offence committed by
the person in respect of property which has been specially
entrusted to such ’a person and which be holds in -a
fiduciary capacity. [768 F]
In the present case. the appellant denied that there was
any special entrustment of any property or that he was
holding any. property in ’a fiduciary capacity. It was
neither possible nor desirable to express any opinion on the
merits of such a plea. It was not possible to do so because
the facts were not in possession of the court and
furthermore the facts could not be before the court without
proper investigation and enquiry. It was not desirable to
do so because if any such opinion be expressed it might
prejudice or embarrass either party. [768 G]
R. P. Kapur v. State of Punjab, [1960] 3 S.C.R. 388;
Velji Raghavji Patel v. State of Maharashtra, [1965] 2
S.C.R. 429, Bhuban Mohan Ran(,v.Surendra Mohan Das, I.L.R.
[1952] 2 Cal. 23, referred to.
JUDGMENT:
CRIMINAL APPELLATE JURISDICTION : Criminal Appeal No. 134 of
1967.
Appeal by special leave from the judgment and order
dated June 7, 1967 of the Calcutta High Court in Criminal
Revision No. 1100 of 1965.
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Debabrata Mukherjee and Sukumar Ghose, for the appel-
lant.
Sadhu Singh, for the respondent.
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The Judgment of the Court was delivered by
Ray, J. This is an appeal by special leave against the
judgment of the Calcutta High Court dated 7 June, 1967
refusing to quash the process issued and the proceedings
pending before the Additional Chief Presidency Magistrate,
Calcutta under section 406 of the Indian Penal Code.
The appellant and the respondent entered into a
registered deed of partnership on 27 March, 1963. The name
of the partnership business was "Allied Engineers". The
nature of the business was that if the tender submitted by
the respondent to the Eastern Railways for extension of
bridge No., 2 at the west and of Howrah yard, West Bengal
was accepted by the Eastern Railways the said work would be
deemed to be included within the partnership. Under the
terms of partnership agreement the capital was Rs. 20,000 to
be contributed equally by the partners within six months
from the date of the agreement. The main office of the
partnership was at 12/1/5 Manohar Pukur Road, Kalighat,
Calcutta. Another term of the partnership was that if the
tender was accepted the appellant would advance or lend from
time to time a total sum of Rs. 20,000 towards the work
represented by the tender as and when necessary. The amount
so advanced would be repayable to the appellant with
interest at six per cent per annum and 50% of the profit to
be earned. The respondent was, under the terms of
partnership agreement, to execute an irrevocable power of
attorney in the manner and with powers as provided in the
draft approved by the partners. The bankers of the firm
would be United Bank of India Limited and all cheques on the
said bank would be signed by both the partners. The
agreement further provided that all cheques in respect of
the work in the name of the respondent, S. K. Ghosh, in
Eastern Railways would be drawn on the banking account
operated by the partner Debabrata Gupta, namely, the appel-
lant for which the respondent would execute an irrevocable
power of attorney.
The case of the appellant is that he advanced to the
partnership from time to time an, aggregate sum of Rs.
50,000 for completion of the work. The respondent executed
the power of attorney in favour of the appellant on 27
March, 1963 and authorised the appellant to submit all
bills, interim as well as final, to receive cheques and to
do necessary things on behalf of the respondent in
connection with the said work for extension of bridge under
the partnership agreement.
On 18 April, 1964 a second deed of partnership was made
between the appellant and the respondent in modification of
the earlier deed dated 27 March, 1963. It was recited there
that the appellant had invested to the extent of Rs. 50,000
for the
767
aforesaid work of construction of the bridge. It was also
recited in the agreement that the respondent was not in a
position to contribute to his share of the capital. The
second deed further provided that the amount contributed by
the appellant "shall be repaid immediately after the
collection of the bills from the Eastern Railways". The
banking account was to be operated by the appellant and all
bills collected and security refunded by the Eastern
Railways in of the first agreement was to be deposited by
the parties with the bank forthwith.
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It appears that disputes arose between the appellant
and the respondent whereupon the respondent wrote to the
bank to stop. all payments to the appellant. The respondent
sent to the appellant a notice for dissolution of the
partnership. The appellant in accordance with the
partnership agreement instituted proceedings in the High
Court at Calcutta on or about 8 September, 1965 for filing
an arbitration agreement under section 20 of the Arbitration
Act. The High Court appointed an arbitrator for adjudi-
cation of disputes between the parties.
Meanwhile, summons was issued by the Chief Presidency
Magistrate, Calcutta under sections 406 and 424/34 of the
Indian Penal Code against the appellant. The respondent on
19 June, 1965 had lodged a complaint against the appellant
for process under sections 406 and 424/34 of the Indian
Penal Code against the appellant and against two other
persons alleging that the appellant had dishonestly
withdrawn sums totaling about Rs. 92,000 from the account of
the partnership firm and further that in collusion with
other persons had removed the books of accounts.
The respondent also filed a suit being Title Suit No. 15
of 1966 in the Third Court of the Subordinate Judge,
Alipore, West Bengal against the appellant for dissolution
of partnership and for accounts. In that suit the
respondent obtained a temporary injunction against the
appellant restraining him from receiving payment from the
Eastern Railways and from operating the bank account of the
partnership.
The appellant and the accused No. 2 instituted
proceedings in the High Court at Calcutta for quashing the
criminal proceedings. The High Court at Calcutta quashed
the process issued under sections 424/34 of the Indian Penal
Code against accused No. 2 on the ground of want of
territorial jurisdiction, but refused to quash the process
under section 406 of the Indian Penal Code, against the
appellant.
Counsel on behalf of the appellant contended first that
there could be no issue of process in disputes between the
partners and
768
secondly the Additional Chief Presidency Magistrate had no
jurisdiction to issue process because the alleged offence
had taken place outside the jurisdiction of that court.
Counsel for the appellant relying on the decision of this
Court in R. P. Kapur v. The State of Punjab(’) contended
that the High Court could ,exercise inherent jurisdiction to
quash proceedings where the allegations in the complaint did
not make out a case. It is true that the Court can in some
cases do so. The question is whether the present case is
one of that type.
Counsel for the appellant relied on the decision of this
Court in Velji Raghavji Patel v. State of Maharashtra (2)
where one of the partners was convicted of an offence of
criminal breach of trust under section 409 of the Indian
Penal Code and this Court held that where a partner realised
the sum in his capacity as partner and utilised them for the
business of the partnership, he was only liable to render
accounts to his partners and his failure to do so would not
amount to criminal breach of trust. Counsel for the
appellant invoked the application of the same doctrine to
the present case.
In order to accede to the contention it has to be
established first that the dispute is only between the
partners and secondly it does not relate to any special
entrustment of property which constitutes one of the basic
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ingredients of an offence under section 406 of the Indian
Penal Code. This Court in Patel’s case(’) approved the
decision of the Calcutta High Court in Bhuban Mohan Rana v.
Surendra Mohan Das(3) and said that before criminal breach
of trust is established it must be shown that the person
charged has been entrusted with property or with dominion
over the property. In other words, the offence of criminal
breach of trust under section 406 of the Indian Penal Code
is not in respect of property belonging to, the partnership
but is an offence committed by the person in respect of
property which has been specially entrusted to such a person
and which be holds in a fiduciary capacity.
In the present case, the appellant denies that there
was any special entrustment of any property or that he was
holding any property in a fiduciary capacity. It is neither
possible nor desirable to express any opinion on the merits
of such a plea. If is not possible to do so because the
facts are not in possession of the court and furthermore the
facts cannot be before the court without proper
investigation -and enquiry. It is not desirable to do so
because if any such opinion be expressed it may prejudice ox
embarrass either party.
(1) [1960] 3 S.C.R. 388.
(2) [1965] 2 S.C.R. 429.
(3) I.L.R. [1952] 2 Cal. 23.
769
The plea as to lack of territorial jurisdiction cannot
also be decided on the materials nor can an opinion be
expressed on that question.
It is made clear that all pleas and defenses are left
open to the appellant including the question whether there
was any special entrustment of any property to the appellant
and the territorial jurisdiction of the Court.
For these reasons, the appeal fails and is dismissed.
R.K.P.S. Appeal dismissed.
770