(1.) B. K. Shanna, J. These are two con nected criminal revisions preferred by the sales officers of Star Paper Mills Ltd. Saharanpur.
(2.) THE facts leading to these revisions are that Raj Tilak Jain, Sales Officer, Star Paper Mills Ltd. , Saharanpur filed a Criminal Case No. 4416 of 1989, before the Chief Judicial Magistrate, Saharanpur against (1) Vijay Kumar Sarawgi son of Satya Narain Sarawgi, Partner of M/s. Kagaz Kendra Bombay, (2) Smt. Kanta Devi Sarawgi, wife of Sri Satya Narain Sarawgi partner of M/s. Kagaz Kendra, Bombay, (3) M/s. Kagaz Kendra, Bombay, (4) M/s. Vijai Kumar Satya Narain, Bom bay and (5) M/s. Deepak Transport Agency Associates, under Sections 407, 420 and 120-B IPC mentioning therein that M/s. Star Paper Mills Ltd. are manufacturers of various varieties of Kraft, writing and printing papers that goods are supplied by the company to the buyer against the terms of payment through DP and DA docu ments, that in case of DA documents the Hundi, Bill and consignee copy of the goods receipt for the goods despatched are sent through bankers for presentation to the buyer for acceptance and payment on due dates mentioned on each Hundi, that in the event of despatch through railways, sometimes the railway receipts are delivered directly to the buyers against assurance of buyer of payment of Hundi on due date in bank to avoid demurrage at destination on account of delay in presen tation of RR through bank, that thus in case of DA documents the buyer, in lieu of cash payment, accepts and signs the hun-dies with assurance of their payment on due dates in the bank and on this assurance obtains the valuable documents including consignee copy of the goods receipt or railway receipt and collects goods from carrier, that they are required to deposit its value in the bank on due dates, that the hundi documents so accepted and signed by the buyers against the receipt of the goods are 'negotiable Instruments' and are considered a valid order of payment by the bankers, that this is an accepted mode of business recognised by the bankers for, extending various credit facilities that the goods are supplied against terms of pay ment through DA documents only where the financial position of the buyer is con sidered sound, that in the first week of August, 1986 and Shri Vijay Kumar Sarawgi son of Sri Satya Narain Sarawgi ap proached the complainant and other sales executive of the Star Paper Mills (hereinafter referred to as the company) at Saharanpur and introduced himself as leading paper merchant of Bombay, that he informed that he was trading in paper in the name of Ms. Kagaz Kendra and M/s. Vijay Kumar Satya Narain both having their business premises at 73, Bajaj Bhawan Nariman Point, Bombay that he represented himself as partner of these firms that the name of other partners were not disclosed by him except that of Smt. Kanta Devi Sarawgi wife of Sri Satya Narain Sarawgi as partner of M/s. Kagaz Kendra, resident of the same place, that Sri Vijay Kumar Sarawgi represented that they shall be purchasing their main re quirement in M/s. Kagaz Kendra and he said firm was having sound financial status and was enjoying good banking facilities and thus they were capable of paying the hundi documents sent by the Star Paper Mills through its bankers on specified dates that they informed the names of their bankers as M/s. Central Bank of India, Bombay, Main Branch Bombay and M/s. Allahabad Bank, Bombay Samachar Marg, Bombay and represented that they had good limits in the said banks that the complainant and other officers of the company felt impressed by his repre sentations and accordingly to supply goods to the said firms on the terms of payment through DA documents payable on specified dates and in pursuance there of sent six consignments for M/s. Kagaz Kendra (details of the six consignments disclosed in para 6 of the complaint); that out of the above six consignments 5 con signments were dispatched from Saharan pur to Bombay through Railways; that Sri Vijay Kumar Sarawgi of M/s. Kagaz Kendra obtained the railway receipt of the 5 consignments on assurance of the accep tance and payment of Hundi documents in the bank on due dates specified on each Hundi when presented through bank that the said railway receipts were received by them alongwith the copy of the letter to the bankers whereby Hundis and bills of the respective consignments were sent through Bank of Baroda, Saharanpur for payment of M/s. Kagaz Kendra on due dates, that Sri Vijay Kumar Sarawgi ac cepted and signed the Hundi documents in the bank and received goods by using the railway receipts pertaining to the said hundies but did not pay Hundi documents in the bank as assured when presented and the same were returned by the bank un paid that similarly the 6th consignment pertaining to Hundi No. CB-123 was sent from Saharanpur to Vapi through Truck No. URF-3145 and the documents of the same were sent through bank that Sri Vijay Kumar Sarawgi of M/s. Kagaz Kendra accepted the said Hundi for Rs. 1,49,465 and collected the goods receipt of the consignment from the bank with as surance of its payment on due date specified on it but did not deposit the value of the said Hundi as assured after collecting the goods from the transport company and all the hundies were returned by the bank as unpaid, that thus they succeeded in fraudulently obtaining the goods of the said 6 consignments worth Rs. 3,62,354 by accepting the Hundi documents in the bank without any inten tion to pay the same on due dates as as sured by them that the said hundies were signed only to induce the complainant and other concerned officers of the company and to fraudulently obtain the goods from the company and they had no intention to pay the same right from the beginning that further the company despatched goods worth Rs. 3,61,337 vide 6 consignments through DA documents from Saharanpur to Bombay and Vasi through M/s. Deepak Transport Agency, Saharanpur, (details of the consignments are given in para 8 of the complaint), that the aforesaid company also despatched one consignment through M/s. Deepak Transport Agency, Saharan pur to the other firm of Sri Vijay Kumar Sarawgi, namely M/s. Vijay Kumar Satya Narain, that the Hundi bill and consignee copy of the goods receipts of the above 7 consignments were sent through bank of Baroda, Saharanpur to M/s. Kagaz Kendra and M/s. Vijay Kumar Satya Narain respectively for acceptance and payment that the said consignments were entrusted to M/s. Deepak Transport Agency as 'self consignments and the company Star Papers Mills Ltd. as the con signor as well as consignee in respect of the said consignments and M/s. Kagaz Kendra and M/s. Vijay Kumar Satya Narain were required to retire the said documents from the bank against accep tance of hundi documents and pay the same to the bank on due dates mentioned on the hundi that M/s. Kagaz Kendra and M/s. Vijay Kumar Satya Narain were en titled to receive the said consignments from the transport company only on the production of consignee copy of the goods receipt to be obtained by them from the bank against acceptance of hundies that M/s. Kagaz Kendra and M/s. Vijay Kumar Satya Narain, however did not accept the hundies and as required did not collect the goods receipts of the said consignments from the bank for taking delivery of goods and fraudulently obtained the goods of the said consignments from the staff of the said transport company at Bombay and Vasai without producing the consignee copies of the goods receipts out of the way knowing fully well that they had no right whatsoever to receive the said goods without accepting the hundies for pay ment on due date in the bank and produc ing consignee copies of goods receipts duly endorsed in their favour by the bank that the said transport company was re quired to deliver the said consignments only to the consignor or to their nominee on production of consignee copies of the goods receipts duly endorsed by the bank but as it has come to the complainants knowledge from the transport company that they had delivered the said consign ments to the said M/s. Kagaz Kendra and M/s. Vijay Kumar Satya Narain without obtaining the consignee copy of the goods receipts that this act of the transport com pany amounted to criminal breach of trust in respect of the property worth Rs. 4,68,097 entrusted to them as carrier for which they were strictly accountable to the company that the consignments being 'self were to be delivered to the company or to their nominee against production or consignee copies of the goods receipts duly endorsed by bank that thus in col lusion and conspiracy with the staff of the said transport company M/s. Kagaz Kendra and M/s. Vijay Kumar Satya Narain and its partners further succeeded in obtaining fraudulently and dishonestly the goods worth Rs. 4,68,097 pertaining to the said 7 consignments without accepting and retiring the documents from the bank as assured by the said Sri Vijay Kumar Saraogi and made no payment towards them that similarly the company from their mills delivered goods worth Rs. 2,23,105 vide 4 consignments against ac ceptance of hundies documents by the said Sri Vijay Kumar Sarogi on behalf of M/s. Kagaz Kendra as partner on his specific assurance for payment on due dates (the details of the consignments are available in para 10 of the complainant), that Sri Vijay Kumar Saraogi, however instructed that the said hundies may not be presented to the bank for payment on due dates as they shall be making the payment of the said hundies directly that however despite repeated assurance neither the dishonoured hundies returned by the bank were paid nor the said four hundies duly accepted and singed by him for M/s. Kagaz Kendra against receipt of the goods were paid by them and the company was further deprived of goods worth Rs. 2,23,105 by them by accepting the hundi documents which they never intended to pay and they merely signed the same to wrongfully induce the company to part with the goods which the company would not have delivered had the company back knowing that they would not pay the hun dies as assured by the said Sri Vijay Kumar Sarawgi, that the they have defrauded the company to the tune of Rs. 10,53,547 the value of the above mentioned 17 consign ments and have caused wrongful loss to the company and gain to themselves, that after the return of the documents the company was given further false assurances by the said Sri Vijay Kumar Sarawgi that the payments of the same were being arranged but it was later on revealed that he was only gaining time and in the meanwhile they have disposed off the major assets of the said business as well as the place of business and have shifted to premises II, Horniman Circle Botawala Building, Bombay that they have by various modus operandi taken out the proceeds of the goods from the said firms to defraud in a well planned manner in collusion and con spiracy with the partners of the said firms and cheated the company to the extent of Rs. 10,53,547.
(3.) THE accused Opp. No. 2 Vijay Saraogi alone preferred Crl. Revision No. 524 of 1989 against the said order dated 4-10-1989 of the CJM before the Sessions Judge. THE learned Sessions Judge after hearing the Counsel for Vijay Kumar Saraogi, the complainant and the learned State Counsel allowed the revision and accepted the final report in regard to all the four forever accused Opp. parties by his order dated 4-1-1990. THE learned Ses sions Judge took the view that there was no Criminal intent in the beginning and that it was merely a case of breach of contract and cannot give rise to prosecution under Sec tion 420 IPC regarding the complainant company's plea that these accused realised the price from their nominees but did not make payment of these consignment to the company, the learned Sessions Judge ob served that no such case was taken in the complaint. He observed that it was in the protest petition that the plea was taken. He also took the view that the non-pay ment of the price realised to the company did not constitute an offence under Sec tion 420 IPC. He rejected the view taken by the CJM that the goods were entrusted to these 4 accused as agent and held that it was a new case which was neither the complainant nor in the evidence nor even in the protest petition. He further took the view that it was not a case of entrustment to the accused in any manner much less an agent that thus no prima facie case under Section 409 IPC was made out. Regarding the offence under Section 420 IPC he took the view that the ingredients of the offence of cheating were also not satisfied. He observed that there was a distinction be tween breach of contract and cheating and that it depends upon the intention of the accused at the time of the inducement which may be judged by his subsequent conduct but for which the subsequent con duct is not the sole test, that to hold a person guilty of cheating, it is necessary to show that he had fraudulent or dishonest intention at the time of making the promise, that from his mere failure to keep up the promise subsequently such a cul pable intention right at the beginning Le. when he made the promise cannot be presumed that where there was no evidence to show that the accused had dishonest intention right from the begin ning not to pay for the goods ordered on credit no offence of cheating can be made out. He further observed that it was to be seen whether there was deception on the part of the accused at the time of making promise or it was a mere failure to honour the promise and in the case of mere failure it will not by itself constitute the offence of cheating. He referring to the allegation in the complaint that goods are supplied against the terms of payment of DA docu ments only where the financial position of the buyer is considered sound. He also quoted from the statement of the president- director of the company (Star Paper Mills) to show that he considered Vijay Kumar Sarawgi accused No. 1 in the com plaint to be a creditable business man that the sale of goods to the accused Nos. 1 to 4 was on interest free credit through DA documents in pursuance of a policy laid down by the directors of the company and that it was not as a result of any inducement or fraudulent representation to the com pany by the accused, that the term of pay ment of interest in case of non- payment within the stipulated period in hundies showed that there was no dishonest or fraudulent intention.