Prabhu Dayal and Another vs Satish Chand Khandelwal

P.N. Harkauli, J.—By these applications for revision the applicants have prayed that the charge framed against them by the learned Magistrate under Section. 406/34 IPC may be quashed.

2 The circumstances giving rise to these revisions are briefly as follows.

Prabhu Dayal, applicant No. 1, and Purshottam Das, father of the opposite party entered into a partnership for carrying on business of manufacturing straw board. The terms of the partnership were recorded in a written agreement, which is on record. Paragraph 16 of this agreement needs to be noticed here. It was provided in this paragraph of the partnership agreement that the cash, stock and the account books of the partnership shall remain in possession of Purshottam Das but the dues of the firm will be realized from third persons by Prabhu Dayal, applicant, whose duty it shall be to get the realizations entered in the account books and to deposit the same with Purshottam Das without delay. It was further provided in this paragraph that if perchance any amount realised by Prabhu Dayal was not got entered in the account books and was not deposited with Purshottam Das as provided earlier, Prabhu Dayal shall be liable to deposit such amount with interest from the date of realisation till the date of deposit.

Satish Chandra Khandelwal, opposite-party, who is the son of Purshottam Das, filed two complaints against Prabhu Dayal and his son Munni Lal Jain applicants alleging that they had made realizations of various dues of the firm from third persons and they had misappropriated the same and thus they had committed offence u/s 406 read with Section. 34 IPC. The learned Magistrate, after recording the statements of some witnesses, framed a charge u/s 406/34 IPC against both the applicants.

Feeling aggrieved by this framing of charge the applicants preferred two revisions before the Sessions Judge. The learned Additional Sessions Judge, however, dismissed those applications for revision. Thereupon, these two applications for revision were filed in this Court.

The learned Counsel for the applicants contended that there could be no question of an offence u/s 406 IPC being committed by either of the applicants. He argued that a partner of a firm being a co-owner of all the assets of a firm is entitled to possess the same, and so a partner cannot be guilty of an offence u/s 406 IPC in respect of the monies of the firm. In support of his contention he placed reliance upon a ruling of the Supreme Court reported in Velji Raghav ji Patel v. The State of Maharashtra AIR 1975 SC 1433.

I am unable to agree with this contention of the learned Counsel for the applicants. In this ruling it has been observed as follows:

Upon the plain reading of Section. 405, IPC it is obvious that before a person can be said to have committed criminal breach of trust 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 or disposed of in violation of any direction of law, etc. Every partner has dominion over 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 requirements of Section. 405. 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 Therefore, rightly pointed out by Harris, C. J., the prosecution must establish that dominion over the assets or a particular asset of the partnership was, by a special agreement between the parties, entrusted to the accused persons. 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.

It is clear from these observations that ordinarily a partner has dominion over the property of the firm by reason of his status as a partner under the provisions of the Partnership Act. In such a case a partner does not acquire dominion over the property as a result of any entrustment and so he cannot be guilty of an offence u/s 406 IPC. But where a partner acquires dominion over the property not under the law of partnership by virtue of his position as partner but by reason of a special agreement between the parties, then it would be a case of entrustment and if it is misappropriated or disposed of in violation of the law etc. it would be a case of criminal breach of trust.

Now I have mentioned the provisions of para 16 of the partnership agreement earlier. A perusal thereof makes it clear that Prabhu Dayal was given the right to realize the dues of the firm under this particular term and subject to the conditions specified in the said paragraph. So, in the present case Prabhu Dayal, when he realized the dues of the firm he did so not by reason of his authority as a partner under the law but by reason of this special agreement. That being so if he misappropriated the amount, which obviously is a question of fact to be decided at the trial in the light of evidence and not in these proceedings, then he would be guilty of an offence u/s 406 IPC.

I am, therefore, of the opinion that it cannot be said that no charge u/s 406 IPC could be framed against Prabhu Dayal because the amounts realised were the dues of the firm in which he was a partner. That being so, the revision application, so far it is directed against the framing of the charge against Prabhu Dayal, must fail.

The learned Counsel for the applicants then contended that in any case Munni Lal Jain was not a partner in the firm. So even if he made any realizations illegally or in an unauthorised manner it cannot be said that he had been entrusted with the money and if there was no entrustment he could not be charged with an offence u/s 406 IPC. This argument appears to me to be sound. There can be no criminal breach of trust unless there is entrustment. It is true that Munni Lal Jain was charged not u/s 406, simplicitor but u/s 406 read with Section. 34 IPC. But it appears to me that Section. 34 IPC could have no application in the circumstances of this case. In order to attract the application of Section. 34 IPC two conditions must be fulfilled namely, (1) the criminal act must be done by several persons and (2) such act must be done in furtherance of the common intention of all of them. It is obvious that the first condition can only be fulfilled when the nature of the criminal act, i.e. the offence, is such that it could be committed by the fifteen persons sought to be made liable by application of Section 34 IPC. If the nature of the act of offence is such that the accused person sought to be made liable by applying Section. 34 IPO could not have committed it then Section. 34 IPC could have no application. As already pointed out no offence u/s 406 IPC can be committed unless there is entrustment. It is no where the case of the prosecution that the money in question was ever entrusted to Munni Lal Jain by the complainant directly or indirectly. So Munni Lal Jain could not possibly have done this criminal act, i.e. committed the offence of criminal breach of trust and there was no question of his having done this criminal act along with Prabhu Dayal. So in my opinion Section. 34 IPC can have no application to this case. No doubt it is possible that a person not entrusted with the property may conspire with and/or abet the person so entrusted to commit criminal breach of trust and in such a case the former may be made liable on the ground of abetment. But that is a different matter altogether. Consequently, I am of the opinion that Munni Lal Jain could not be charged u/s 406/34 IPC and so this charge against him is liable to be quashed.

In this result these applications for revision are allowed in part and the charge framed against Munni Lal Jain, applicant, u/s 406/34 IPC is quashed. The prayer of Prabhu Dayal for quashing the charge u/s 406 IPC against him is rejected.