RAJ TILAK JAIN Vs. STATE OF U P

JUDGEMENT

(1.) These are two connected Criminal Revisions preferred by the Sales Officer of Star Paper Mills Ltd. Shaharanpur.

(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) Vijai Kumar Sarawgi son of Satya Narain Sarawgi, Partner of M/s Kagaz Kendra, Bombay, (2) Smt. Kanta Devi Sarawagi 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, Bombay, and (5) M/s Deepak Transport Agency Associates, under Sections 407, 420 and 120-B I.P.C. mentioning therein that M/s Star Paper Mills Ltd. are manufactures 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 D.P. and D.A. documents, that in case of D.A. 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 presentation of R.R. though bank, that thus in case of D.A. documents the buyer, in lieu of cash payment, accepts and signs the hundies which 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 payment through D.A. documents only where the financial position of the buyer is considered sound, that in the first week of Aug., 1986 one Shri Vijai Kumar Sarawgi son of Sri Satya Narain Sarawgi, approached the complainant and other sales execulive 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 M/s Kagaz Kendra and M/s Vijai 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 or 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 requirement in M/s Kagaz Kendra and the 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 representations and accordingly agreed to supply goods to the said firms on the terms of payment through D.A. documents payable on specified dates and in pursuance thereof 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 consignments were despatched from Saharanpur to Bombay through Railways; that Sri Vijay Kumar Sarawgi of M/s Kagaz Kendra obtained the railway receipts of the 5 consignments on assurance of the acceptance 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 Hundies and bills of the respective consignments were sent through Bank of Baroda, Saharanpur for payment by M/s Kagaz Kendra on due dates, that Sri Vijay Kumar Sarawgi accepted 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 unpaid, 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 assurance 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. 3,62,345/- by accepting the Hundi documents in the bank without any intention to pay the same on due dates as assured 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 D.A. documents from Saharanpur to Bombay and Vasai 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, Saharanpur to the other firm of Sri Vijai Kumar Sarawgi namely M/s Vijai 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 entnisted to M/s Deepak Transport Agency as 'Self' consignments and the company (Star Paper Mills Ltd.) was the consignor 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 acceptance 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 entitled 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 payment on due date in the bank and producing consignee copies of goods receipts duly endorsed in their favour by the bank, that the said transport company was required to deliver the said consignments only to the consignor or to their nominees 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 consignments 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 company 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 of consignee copies of the goods receipts duly endorsed by bank, that thus in collusion 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 Sarwagi and made no payment towards them, that similarly the company from their mills delivered goods worth Rs. 2,23,105/- vide 4 consignments against acceptance of hundi documents by the said Sri Vijay Kumar Sarawgi 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 Sarwagi 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 assurances neither the dishonoured hunclits returned by the bank were paid nor the said four hundies duly accepted and signed 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 in-tended 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 been knowing that they would not pay the hundies as assured by the said Sri Vijay Kumar Sarawgi, that then they have defrauded the company to the tune of Rs. 10,53,547/- the value of the above-mentioned 17 consignments 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 IL 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 conspiracy with the partners of the said firms and cheated the company to the extent of Rs. 10,53,547/-.

(3.) It was claimed in the complaint that the matter was reported to the police of police station Sadar Bazar but no action was taken. It was prayed that the police be directed to register and investigate the case and that the accused be tried and redress be given. On this complaint, the C.J.M. Saharanpur, acting under Sec. 156(3) vide its order dated 23.11.1987 directed the S.H.O. Sadar Bazar to register a case under the appropriate Sec. of law and to investigate. The case was accordingly registered under Sections 407, 420 and 120-B I.P.C. and investigation was made. After investigating the case, the police submitted a final report dated 15.11.1988 on which notice was sent to the present revisionist/complainant by C.J.M. He filed protest petition on 16.1.1979 in which inter alia it was pleaded that the seven consignment detailed in para 8 of the complaint (which became the F.I.R. on the registration of the case in pursuance of the direction of Sec. 156(3) of the Crl. Procedure Code) were sent by the company to the nominees of Vijay Kumar Sarawgi, the present Opp. Party No. 2 in revision No. 50 of 1990. It was alleged that the understanding arrived at between the complainant and Shri Vijay Kumar Sarawgi was that Shri Sarawgi will get the documents released from bank after executing hundies and after making an endorsement on the G.R. in favour of the above mentioned parties, the goods shall be released by the Transport Company in favour of those parties, i.e. nominees of the accused V.K. Sarawgi after collecting G. Rs., that Shri Vijay Kumar Sarawgi instead of getting the documents released and without executing the hundies got the consignments released in league with the above mentioned nominees from M/s Deepak Transport Agency (Opp. Party No. 6 in present Revision No. 50 of 1990), that the I.O. found that the nominees had made payments to him i.e. to Vijay Kumar Sarawgi. It was claimed that Vijay Kumar Sarawgi was acting as agent of the complainant company and so he was legally bound to pay it to the complainant company, but he did not pay the amount received from his said nominees to the company and instead misappropriated the same to his own use and committed misappropriation and breach of trust, (The names of these nominees have been specified in para 9 of the protest petition); that the interest clause in the Hundi was introduced in order to meet any eventuality that may arise due to unavoidable circumstances and in case that accused persons are not able to arrange for the payment of Hundies within 45 days of the day of execution and that they need a week or two more to arrange for the payment that in that case only the interest clause was to be put into operation, that in any case the main purpose for execution of Hundies was to clear the payment of the goods within 45 days and at no time it was in-tended that the accused persons shall be permitted to sit over the payment for an indefinite period, that it was only due to this reason that the goods were sent through Bank and the goods were to be released only after the execution of Hun-dies and clearance of documents from the Bank and then the goods were supposed to be released from the Railways or the Transport Company, depending upon case to case, that whether the fraudulent intention on the part of the accused was proved or not, was to be decided by the Court, that it was wrong to say that offence under Sec. 407 is also not proved against Deepak Transport, on the ground that merely because goods were released without obtaining clearance documents no wrongful loss and no wrongful gain has been caused to any one, that because Sri Vijay Kumar Sarawgi has admitted the acceptance of goods the question of wrongful loss to the complainant Company and wrongful gain to Shri Vijay Kumar Sarawgi did not arise, that it is only because of the act of Deepak Transport Agency that wrongful loss has been caused to the complainant company because Shri Vijay Kumar Sarawgi got the goods released through his nominees without his executing Hundies which is negotiable instrument as defined under the Negotiable Instruments Act, the investigating officer took into consideration the defence of Shri Vijay Kumar Sarawgi when he told the Investigating Officer that he has not received any intimation from the Bank regarding receipt of documents concerning 7 consignments as mentioned in the para 8 of the complaint, that the Investigating Officer wrongly discarded the official version of the bank officers when they told him that they had sent the information to Sri Vijay Kumar Sarawgi regarding the receipt of Hundies and other documents concerning the said 7 consignments as mentioned in Para 8 of the complaint, a clear case of cheating and criminal breach of trust is also made out against accused No. 5 Deepak Transport Agency as it fraudulently and dishonestly handed over the goods to the accused Mr. Vijay Kumar Sarawgi directly against the procedure and instructions of the complainant company that Transport Company will not hand over the goods to the accused without the clearance from the bank and thus the accused escaped from their legal guarantee of paying the price of the goods within 45 days, that as Deepak Transport Company (accused No. 5) handed over the goods to the accused directly against and in violation of the directions of the complainant company that the goods will be handed over only after the clearance from the Bank, it (the accused Transport Company) committed an offence of Criminal breach of trust as defined under Sec. 405 of I.P.C. which is punishable under Sec. 406 I.P.C. After that the learned Magistrate by passing the order dated 4.10.1989 accepted the final report in respect of the accused No. 5, Deepak Transport Agency but rejected the same to the extent of accused Nos. 1 to 4 in the complaint namely Vijay Kumar Sarawgi partner of M/s Kagaz Kendra Bombay, Smt. Kanta Devi Sarawgi, wife of Sri Satya Narain Sarawgi, partner of M/s Kagaz Kendra, M/s Kagaz Kendra Bombay and M/s Vijay Kumar Satya Narain, Bombay and directed their summoning for the offence under Sections 403, 409 and 420 I.P.C. He took note of the fact that the persons to whom the goods of the six consignments of Aug., 1986 were sent, had made payment to M/s Kagaz Kendra but these accused persons did not pay the amount to the complainant, that about the six more consignments sent in Aug. and Sept., 1986 also its price had been realised by M/s Kagaz Kendra accused but it also was not paid to the complainant, that in the same manner, the four accused had received the payments of the 4 consignments sent in Aug. and Sept., 1986 and this amount also was not paid by them to the complainant company and that they had misappropriated the same to their own use. He was of the view that these 4 accused have prima facie committed the offence under Sec. 403 I.P.C. as these four accused had realised the price of the goods and misappropriated the same. He also took note of the fact that these accused persons used to send orders for supply of goods to different persons and the company used to send goods to those persons and the price of those goods used to be paid to these accused, that so these four accused were acting as agents of the company aforesaid, that consequently these amounts got entrusted to these accused and they were under obligation to deliver these amounts to the company but did not deliver it to the company and instead misappropriated the same and, therefore, the offence under Sec. 409 I.P.C. was made out. He rejected the view of the Investigating Officer that it is a civil matter.