STATE OF BOMBAY Vs. RUSY MISTRY

JUDGEMENT

(1.) This appeal by special leave filed by the State of Bombay is directed against the judgment of the High Court of Judicature at Bombay setting aside the convictions of the respondents and the sentences passed on them by the Sessions Court for Greater Bombay, and acquitting them of the offences with which they were charged.

(2.) A private limited company called the Industrial Commercial Trust Limited was formed on April 1, 1943. The principal shareholders in that company were the first accused and one Sir Chinubhai Madhavlal. During the course of that year i.e., 1943, a firm called the Asian Air Associates (hereinafter called "the Company") was established as a subsidiary concern of the Industrial Commercial Trust Limited. Accused No. 1 and Sir Chinubhai Madhavlal were partners of the Company, and accused No. 2 was its General Secretary. The factory and the head office of the Company were at different places. The main work of the Company was the manufacture and repair of Royal Air Force equipment. In or about October 1943 the Company entered into a contract with Messrs. Ramdas and Sons for the purchase of certain machinery and tools at an agreed price of Rs. 3,05,001 and obtained possession of the same. On January 8, 1944, Ramdas and Sons wrote a letter (Ex. C), with an enclosure (Ex. D.) giving a description of the machinery sold, to the Company acknowledging the receipt of the full price. In or about January 1944, Ex. D, the list of machinery, was detached from the letter and the price of the machinery was inserted therein as Rs. 4,05,001, with the result that the list of machinery (Ex. D) was converted into a voucher. On the basis of that voucher, necessary entries were posted in the accounts of the Company debiting the "Plant and Machinery Account" with Rs. 4,05,001, and crediting Ramdas and Sons with an equal amount. An amount of Rs. 3,05,001, was shown as having been paid to Ramdas and Sons, and the balance of Rs. 1,00,000 remained credited to their account. This balance was carried forward from year to year till March 30, 1946. About the end of 1944, accused No. 1 paid Sir Chinubhai Madhavlal a sum of about Rs. 17,00,000 and took over both the Industrial Commercial Trust Limited and the Company, and, thereafter, accused No. 1 and his wife became the partners of the Company. On March 30, 1946, the said balance of Rs. 1,00,000 standing to the credit of Ramdas and Sons was transferred to the personal account of accused No. 1 and a corresponding debit was made in the account of Ramdas and Sons.

(3.) On March 2, 1944, the Company entered into a contract with the Director of Munitions Production representing the Government of India for the manufacture, overhauling, repair and modification of Royal Air Force equipment. The said contract was to come into force retrospectively from November 11, 1943. Under one of the clauses of the contract, the Company would be entitled to the actual cost plus 7 1/2 per cent - later on enhanced to 10 per cent - profit on the actual cost of the work done by it. Depreciation was one of the items to be taken into consideration in determining the actual cost. The prosecution case is that the accused dishonestly inflated the cost of the machinery purchased from Ramdas and Sons by forging Ex. D, and attempted to cheat the Government by submitting bills on that basis. The prosecution also relied upon another item, namely, the commission of Rs. 3,338 alleged to have been received by the Company from the Electric Cable and Machinery Co. Ltd., but not included in the accounts with the same object of inflating the cost of the electrical goods purchased from them. It is not necessary to trace the facts in regard to this item as the learned Additional Solicitor General, appearing for the State, does not press the appeal of the prosecution in regard to this item, and, therefore, nothing further need be said about this.