Aamrit Lal vs State of Punjab

V.S. Aggarwal, J.

Petitioner Amrit Lal is one of the partners of M/s Guru Nanak Rice Mills, Badhri Kalan, District Faridkot. As against the petitioner a complaint has been made as a result of which FIR No. 63 of 1995 has been recorded at Police Station Badhri Kalan. It pertains to an offence punishable under Section 406 IPC. In the complaint it has been alleged that the Punjab State Civil Supplies Corporation has one of its office at Faridkot. It had been set up with various objectives including to undertake procurement, import, supply and distribution of such essential commodities as identified by the Government from time to time. For the purpose of procurement of rice from Central Pool, PUNSUP purchases paddy from the market. It was shelled from various rice millers. The Rice Millers supply the rice to Food Corporation of India on behalf of PUNSUP. The rice millers act as agents of PUNSUP. The paddy purchased and the rice obtained after shelling belongs to the Central Government. Neither PUNSUP nor Rice Millers can shell the paddy without permission of the Central Government. In the year 199495 M/s Guru Nanak Rice Mills in which petitioner is a partner agreed to shell paddy of PUNSUP. It had to deliver the rice after shelling to Food Corporation of India. An agreement in this regard had been entered. On 17.11.1994 M/s Guru Nanak Rice Mills, Badhni Kalan were entrusted with 87710 bags of paddy which had been received vide a receipt of 8.11.1994. The yield of rice from superfine quality of paddy is 67%. The petitioner who is a partner of M/s Guru Nanak Rice Mills delivered only 500 bags of rice in February, 1985. The stock of paddy entrusted to and lying in the premises of M/s Guru Nanak Rice Mills was verified on 20.10.1995. It was noticed that there was shortage of 25878 bags amounting to Rs. 77,55,775/. On basis of these facts that there has been criminal breach of trust by unauthorisedly removing the above said bags, a case has been got registered for the offence punishable under Section 406 IPC.

By virtue of the present petition, Amrit Lal petitioner seeks quashing of the first information report. It is contended that as per the agreement between the parties, the petitioner could only be made liable to pay the amount with interest. It is basically a civil dispute and thus the complaint under Section 406 IPC should be quashed. As per the petitioner no case under Section 406 IPC is drawn.

In the reply filed, respondent No. 2 has contested the petition. It has been alleged that the petitioner did not supply the milled rice to the Food Corporation of India within the stipulated period. The terms and conditions were not complied with. The stocks were checked and there was shortage of 25878 bags of paddy. It was the responsibility of the petitioner to keep the paddy in safe custody. It has admittedly been embezzled.

Learned counsel for the petitioner at the time of arguments referred to the agreement copy of which is Annexure P1 to assert that basically it is a civil dispute pending between the parties and therefore, there was no occasion for attracting Section 406 of the Indian Penal Code. Attention of the Court was drawn to certain clauses of the agreement particularly paragraphs 5, 6(iii) and 10 of the agreement and on the strength of the same it was urged that it would not be possible to attract Section 406 IPC. The said clauses are being reproduced below for the sake of facility :

"5. (i) The Miller shall ensure that the resultant rice after milling of paddy is exposed for 72 hours before bagging.

(ii) The degree of polish given to rice shall be 3 to 5% and shall not contravene the provisions of Rice Milling Industry (Regulation and Licencing) Rules, 1959 as amended from time to time.

(iii) In case there is shortfall in the recovery of rice provided in sub clause (i) above the miller shall pay to the (PUNSUP) the cost of paddy equivalent to the shortfall at the rate of 11/2 times the economic cost of paddy;

(iv) The byproducts viz; broken rice, rice kano, nakoo, phak and rice bran etc. obtained in the shelling of paddy, shall be the property of the Miller and the PUNSUP shall have no responsibility in regard to these.

(v) The Miller will be paid shelling and other charges at the convenience of the PUNSUP after the milling operations are completed and the entire rice is delivered to FCI.

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6(iii) The Miller shall complete delivery of rice within 10 days of issuance of paddy to him and rice due to the PUNSUP on the total quantity of paddy issued to him or in the custody released at regular interval shall be delivered not later than the 28th February, 1995. The Miller shall further ensure milling of PUNSUP Paddy and delivery of rice in the following manner :

October/November 20%

December 26%

January 26%

February 28%

In the event of his failure to supply rice within the stipulated period he shall be liable to for an initial @ 21% on the basis of economic cost of left over quantity/stocks of paddy/rice. The decision of Managing Director in this behalf shall be final.

.......

If the miller fails or neglects to observe or perform of his obligations under the contract, it shall be lawful for the PUNSUP to forfeit the security after giving due opportunity and get the work executed at the Miller''s and cost and adjust either in whole or in part extra expenditure and/or the damages, if any suffered by the Govt. as a consequence, from out of the security deposit furnished by the millers or in any other manner, save aforesaid if the miller only perform and collects the contract in all respects and presents an absolute No Demand Certificate from any other Officer/official nominated by him for the purpose, and return in good condition any property of the Govt. remaining with him the PUNSUP shall refund the security deposits to the miller after deducting all costs and all other expenses that the Government may have incurred and all dues and other moral including all losses and damages which the PUNSUP is entitled to recover from the miller."

Perusal of the said agreement revealed that though there was an agreement to refer the civil disputes to Arbitrator, still it will have no impact if any misappropriation referred under the Indian Penal Code is contemplated. Merely it stipulates paying of the damages and interest, does not imply that the paddy could be misappropriated. Perusal of this agreement clearly shows that they are confined to the civil liability. The criminal liability for an act and conduct which attracts the Indian Penal Code is independent of the said agreement. Section 405 of the Indian Penal Code defines criminal breach of trust and reads :

"405. Criminal breach of trust. Whoever, being in any manner entrusted with property, or with any dominion over property, dishonestly misappropriates or converts to his own use that property, or dishonestly uses or disposes of that property in violation of any direction of law prescribing the mode in which such trust is to be discharged, or of any legal contract, express or implied, which he has made touching the discharge of such trust, or wilfully suffers any other person so to do, commits "criminal breach of trust."

It clearly shows that if there was an entrustment of an article which is dishonestly misappropriated or converted to its use or is disposed of in violation of law or legal contract, it would be criminal breach of trust. At this stage suffice to say that reading of the first information report attracts these ingredients. The said argument, therefore, must fail.

There is another way of looking at the same matter. The first information report has been recorded and the same is being investigated. This Court will not stifle the investigation. The inherent powers of the Court are not to be used for that purpose. It is true that the High Court has the inherent powers. The same can be used for securing the ends of justice. Since it is an extraordinary power, it will not be pressed in aid except for remedying a flagrant abuse of the same. This question had been considered by the Supreme Court in the case of Janata Dal v. H.S. Chowdhary and others, AIR 1993 SC 892. While relying on the decision in the case of State of Haryana v. Ch. Bhajan Lal, 1991(1) RCR (Crl.) 383 : 1990(3) Supp SCR 259 the Supreme Court held that ordinarily such powers have not to be utilized to stifle the investigation. The High Court should restrict itself in exercising such powers. It was held :

"This inherent power conferred by Section 482 of the Code should not be exercised to stifle a legitimate prosecution. The High Court being the highest Court of a State should normally refrain from giving a premature decision in a case wherein the entire facts are extremely incomplete and hazy, more so when the evidence has not been collected and produced before the Court and the issues involved whether factual or legal are of great magnitude and cannot be seen in their true perspective without sufficient material. Of course, no hard and fast rule can be laid down in regard to the cases in which the High Court will exercise its extraordinary jurisdiction of quashing the proceedings at any stage. This Court in State of Haryana v. Ch. Bhajan Lal, 1990(3) Supp SCR 259 to which both of us were parties have dealt with this question at length and enunciated the law listing out the circumstances under which the High Court can exercise its jurisdiction in quashing proceedings. We do not, therefore, think it necessary in the present case to extensively deal with the import and intendment of the powers under Sections 397, 401 and 482 of the Code."

In the present case in hand only the first information report has been recorded and the matter is being investigated. The investigation as such cannot be stifled by invoking the inherent powers of the Court particularly as noted above on basis of the complaint it cannot be said that no case is drawn. At this stage, therefore, the petition is totally premature and calls for no interference.

For the reasons noted above, the petition being without merit must fail and is dismissed.