Gobind Prasad Lath vs Suri Paul

S.C. Mital, J.—By our order dated 30th April, 1974, preliminary objections raised by Mr. M.C. Chagla, Learned Counsel for the respondent, were rejected. Thereafter, the parties took very long to agree upon the date suiting their counsel. Even when the case came up for hearing on 2nd December, 1974, Mr. D. Mukherji, Senior Advocate of Calcutta, contended that Mr. A.K. Sen, Advocate, engaged by the petitioner was confined to bed under medical advice. On this ground, adjourment prayed for was granted to 3rd February, 1975.

M/s. Vardhman Spinning and General Mills Ltd., Ludhiana, hereinafter referred to as the Company, had entered into a contract with M/s J.R. Trading Company of Calcutta owned by Shri Janak Raj Punni, appointing the latter the sole selling agent of the products of the Company in West Bengal. Besides, as alleged in the complaint, Shri Janak Raj Punni held a general power of attorney to supervise the office of the Company in Calcutta, run by Parkash Chander Sharma Accountant and Dharam Dev peon. By a separate agreement, Shri Janak Raj Punni appointed Shri Gobind Parshad Lath accused as the distributor for the sale of the Company''s goods in West Bengal, Thus, relationship of principal and agent between Shri Janak Raj Punni and Shri Gobind Parshad Lath was created. Upon these facts, Learned Counsel for the accused contended that there was no privity of contract between the accused and the Company. On the other hand, the point raised was that the accused as sub agent was liable to render accounts to the Company. Section 192 of the Indian Contract Act relied on in this behalf reads:--

Representation of principal by sub-agent properly appointed.

Where a sub-agent is properly appointed, the principal is, so far as regards third persons, represented by the sub-agent and is bound by and responsible for his acts, as if he were an agent originally appointed by the principal. Agent''s responsibility for sub-agent.

The agent is responsible to the principal for the acts of sub-agent.

Sub-agent''s responsibility.

The sub-agent is responsible for his acts to the agent, but not to the principal, except in cases of fraud or wilful wrong.

Clause (2) of the section is obviously not applicable. It has not been shown how clause (3) can be pressed into service. Clause (1) clearly deals with the proposition quit different from the case in hard, in that it envisages transactions entered into by the sub-agent with third persons and the consequent (sic) thereof on the principal.

In the alternative, Learned Counsel for the accused placed reliance on section 194 of the said Act. Section 194 is in the following terms :--

Where an agent, holding an express of implied authority to name another person to act for the principal in the business of the agency, has named another person accordingly, such person is not a sub-agent, but an agent of the principal for such part of the business of the agency as is entrusted to him.

Now clause 7 of the agreement "A" dated 26th July, 1971, between the Company and its agent Shri Janak Raj Punni provides :--

The Selling Agents shall at their own cost employ such clerks, salesman or assistants as may be necessary and the Company shall not be responsible for any amount due to them from the Agents contract of service.

This clause neither expressly nor impliedly conferred authority on Shri Janak Raj Punni to name the accused to act for the principal, i.e., the Company. It further deserves mention that clause 7 (iv) of the agreement above-said stipulated that Shri Janak RAJ Punni would not assign to any person agreement or any interest therein or any of the rights, privileges or obligations thereof without the prior written consent of the Company. Our attention has not been drawn to any material on record to show that for naming the accused, prior written consent of the Company was obtained by Shri Janak RAJ Punni. The other aspect of the matter is that in agreement "B" between Shri Janak Raj Punni and the accused, the former described himself as the principal and the latter as Distributor. Stipulation in clause (2) therein is that the Principal proposed the Distributor to act as the Sole Distributor of the Principal with effect from 15th day of April, 1966. True, Shri Janak Raj Punni in clause (1) of agreement "B" averred that he was the Sole Selling Agent of the Company, but there is no mention of any consent, much less written, received by him from the Company to appoint the accused as the Distributor. Furthermore, in agreement "B" nothing was stipulated to connect the accused with the Company. In other words, this was an agreement between Shri Janak Raj Punni and the accused. For the foregoing reasons, reading of the two agreements marked "A" and "B" would show that no case is made out to attract the provisions of section 194 of the Indian Contract Act.

Learned Counsel for the Company then argued that Shri Janak Raj Punni held a general power of attorney to supervise the working of the office of the Company in Calcutta, manned by Parkash Chander Sharma Accountant and Dharam Dev peon during the relevant period when Shri Janak Raj Punni fell ill, he deputed the accused to act on his behalf. In these circumstances, the accused committed the alleged offences. We do not think that even this aspect of the case makes section 194 of the Indian Contract Act applicable to its facts, for the simple reason that Shri Janak Raj Punni has not been shown to hold an express or implied authority to name the accused to act for the Company in the business of the agency. In the result, the accused cannot be said to be under any obligation to render accounts to the Company.

Objection of the Learned Counsel for the accused challenging the locus standi of the Company to file the present complaint u/s 409 etc. Indian Penal Code, hat not impressed us if the accused is guilty of committing the alleged offences, the Company which is said to have suffered loss cannot be debarred from launching the prosecution.

Learned Counsel for the accused again pressed that the question whether the Ludhiana Court his territorial jurisdiction TO take cognizance of these offences could not be decided in the exercise of the powers of this Court u/s 561-A of the Code of Criminal Procedure. A Single Bench decision of this Court in Murari Lal v. Shiv Parkash, 1971 Curr. L.J. 96 was referred to where in the learned Judge expressed the view :--

This is a matter which cannot be gone into in these proceedings. It is open to the petitioner to raise this objection in the trial Court and then come to this Court on the revisional side if he fails to get relief in the trial Court and the Sessions Court. The contention whether the Court at Nawanshahr has jurisdiction cannot be properly determined in proceedings u/s 561-A of the Criminal Procedure Code.

We do not think that the learned Judge laid down a complete bar, as urged before us. These observations as we understand them were in the context of the facts of that case. It is noteworthy that D. Falshaw, J. (as he then was) in Dr. Shankar Singh Ganda Singh Vs. State of Punjab, , categorised the cases in which section 561-A could be invoked and one of the cases was where the Court lacked jurisdiction to take cognizance of an offence. Debabrata Gupta Vs. S.K. Ghosh, was a case where lack of territorial jurisdiction was taken as one of the grounds for interference u/s 561-A of the Code of Criminal Procedure, but on facts, the learned Judges declined to entertain the objection and the matter was left open for decision by the trial Court. It is significant that there is absolutely no indication in the Supreme Court decision to support the contention raised before us. It is accordingly overruled.

For deciding whether the Ludhiana Court has jurisdiction to take cognizance of the offences in question, it may be mentioned that the common case of the parties before us is that the provisions of the old Code of Criminal Procedure of 1898 apply right up to the stage of the case in this Court. Section 177 of the Code enacts :--

Every offence shall ordinarily be inquired into and tried by a Court within the local limits of whose jurisdiction it was committed. This is a general provision based on the view of the English law that all crime is local and that jurisdiction to deal with it depends on the place where the crime is committed. Learned Counsel for the accused.

vehemently urged that as per allegations made in the complaint, the accused abused the confidence reposed in him by Shri Janak Raj Punni and with a view to defraud Shri Janak Raj Punni and the Company, he got false entries made in the cash books of the Company and forged the document, purporting to be letter of authority, to withdraw huge sums of money out of the sale proceeds realised by the accused Generally the sale proceeds were realised through cheques but with criminal intentions, the accused recovered the sum of Rs. 5,22,000/- odd in cash. The offences under sections 467, 468 and 4/7-A, Indian Penal Code, on the Company''s own showing, were committed in Calcutta. On the other hand, the argument advanced was that commission of these offences culminated in the commission of criminal breach of trust, the major charge u/s 409, Indian Penal Code, against him. Thus, the arguments before us centered round the venue of trial as to the charge u/s 409, Indian Penal Code.

Section 181 (2) of the Code directly dealing with the criminal breach of trust reads :--

The offence of criminal misappropriation or of criminal breach of trust may be inquired into of tried by a Court within the local limits of whose jurisdiction any part of the property which is the subject matter of the offence was received or retained by the accused persons, or the offence was committed.

Jurisdiction to Ludhiana Court is not being claimed by reason of the accused having received or retained any property, which could be the subject of offence. The only remaining ingredient of the section thus is the place where the offence of criminal breach of trust was committed.

Section 405, Indian Penal Code defines criminal breach of trust as under :

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 is well settled that this section is in two parts. The instant case clearly falls in the first part as is evident from the following salient allegations. The accused allegedly realised the salt proceeds in Calcutta or within the territory of West Bengal. It was there that he committed the offences u/s 467, 468, 477 A. Indian Penal Code. It was in Calcutta that the accused failed to deposit the sale proceeds to the tune of Rs. 5, 17,000/- odd in the Company''s account with the Allahabad Bank Ltd., Bara Bazar, Calcutta and in this way he dishonestly misappropriated or converted the said amount to his own use ; hence the commission of the offence of criminal breach of trust by him was complete in Calcutta. It is no gain saying that at this stage the Court has to confine itself to the allegations made in the complaint, supported by oral and documentary evidence. Keeping them in mind, there is no escape from the conclusion that section 181(2) quoted above cannot confer jurisdiction upon the Ludhiana Court. When confronted with this difficulty, Learned Counsel for the Company pressed into service sub-section (4) of section 181 of the new Code of Criminal Procedure of 1973. The same is in the following terms :--

Any offence of criminal misappropriation or of criminal breach of trust may be inquired into or tried by a Court within whose local jurisdiction the offence was committed or any part of the property which is the subject matter of the offence was received or retained, or was required to be returned or accounted for, by the Accused person.

Strong reliance was placed on State of Bihar Vs. S.K. Roy, in which at page 1996, their lordships laid down:--

It is a well-recognised principle in dealing with matters of construction that subsequent legislation may be looked in order to see what is the proper interpretation to be put upon the earlier Act, where the earlier Act is abscure or ambiguous readily capable or more than one interpretation.

In the first place, having regard to the facts of the case in hand, we do not find any ambiguity in the provisions of section 181(2) of the old Code of Criminal Procedure, for the simple reason that the accused was not liable to render any account to the Company anywhere, much less at Ludhiana. In the second place, as said above, this case is not governed by the provisions of the new Code. In the third place upon a consideration of the allegations made in the complaint, the commission of the offence of criminal breach of trust was complete in Calcutta.

We are in respectful agreement with the view of Beaumount C.J., who delivered the Full Bench Judgment in re In Re: Jivandas Savchand, that "when you find a section dealing with a particular form of crime I think it would require strong words to show that any section of more general application was intended to deal also with that particular crime. "It is noteworthy that the view was expressed by the learned Chief Justice in the context of the applicability of the provisions of section 181(2) and section 179 of the Code of Criminal Procedure to a case of criminal breach of trust. Now the argument of the Learned Counsel for the Company to be considered is that since in consequence of the criminal breach of trust committed by the accused, loss to the Company occurred in Ludhiana, therefore, the Ludhiana Court has jurisdiction. Section 179 of the Code pressed into service by the Learned Counsel for the Company reads :--

When a person is accused of the commission of any offence by reason of anything which has been done, and of any consequence which has ensued, such offence may be inquired into or tried by a Court within the local limits of whose jurisdiction any such thing has been done or any such consequence has ensued.

Illustration (a) of the section is :--

A is wounded within the local limits of the jurisdiction of Court X, and dies within the local limits of the jurisdiction of Court Z. The offence of the culpable homicide of A may be inquired into or tried by X or Z.

In the illustration, the offence charged is culpable homicide. The mere act of wounding A is not by itself enough to constitute the said charge. It may no doubt be a ground for another charge but that is immaterial. To constitute the charge of culpable homocide, the consequence of death is essential. Thus reading the section with the help of illustration, we respectfully follow the Full Bench decision of the Bombay High Court (supra) that the consequence envisaged by section 179 is a necessary ingredient or an integral part of the offence.

Same view was expressed by Full Bench decision of the Allahabad High Court in Kashi Ram Mehta Vs. Emperor thus :--

If therefore, the act done and the consequence which has ensued are to be taken as together amounting to the offence, the commission of which is complained against then it necessarily follows that the consequence must be the necessary ingredient of the offence in order that section 179 be applicable. If the offence is complete in itself by reason of the act having been done and the consequence is a mere result of it, which was not essential for the completion of the offence, then section 179 would not be applicable.

The other rulings in point are in re In Re: Rambilas and Others, , Krishnamachari Vs. Shaw, Wallace and Company, , Simpachalam v. Rati Kanta Lika AIR 1917 Cal. 381 Niwasilal Modi and Others Vs. Routhmull, Benerji v. Potnis AIR 1924 Nag. 253 AIR 1933 559 (Lahore) , Ali Mohamed Kassim v. Emperor AIR 1931 Rang. 164 and Suchit Ahir Vs. Emperor, It is clear from them that unless any act or even omission is a necessary ingredient of an offence of criminal breach of trust, it cannot give jurisdiction to a court where that act or omission has been done, though it may be the necessary result or consequence arising therefrom.

V.D. Bhargawa, J. also discussed at length the ruling referred to above in Hira Lal Chaudhary and Others Vs. State, and followed the Full Bench decisions of the Bombay and Allahabad High Courts. The following observations in paragraphs 32 and 34 of the report of the learned Judge deserve particular mention :--

Non-accounting is no part of the criminal breach of trust It is really the result or consequence resulting from the criminal misappropriation Its effect might either be loss to the firm or may result in non-accounting but that would not make it an ingredient of the offence itself.

Where the place of offence is known or can be ascertained, the courts of the place where accounts were to be rendered will have no jurisdiction to try the case.

The Full Bench decision of the Bombay High Court (supra) was followed in Bijoynand Patnaik''s case AIR 1970 All. 110, and the learned Judge field that in a case of complaint u/s 406 where neither entrustment nor conversion has taken place within the territorial jurisdiction of the Court where complaint is lodged, the court has no jurisdiction to proceed with the complaint. Similarly, a Division Bench of the Calcutta High Court in Debendra Nath Sen Vs. Rajendra Chandra Roy, , held that in a case of criminal breach of trust, failure to account is often convincing evidence of the act of misappropriation but not an incident of said act. Non-submission of an account being not an integral part of an act of misappropriation it cannot be said that the offence took place not only at the place where the misappropriation rook place, but also at the place where the accounts were not rendered Ram Saltai v. Krishan Lal AIR 1920 Lah. 119, and Gunananda Dhone Vs. Lala Santi Prakash Nandy, , cited by the Learned Counsel for the Company were cases wherein the accused were under a liability to render accounts at a particular place but failed to do so by reason of having committed an offence of criminal breach of trust. The view expressed by the learned Judges was that the Court within whose territorial jurisdiction the aforesaid place was situated, had the jurisdiction u/s 181(2 of the Code, to try the offence of criminal breach of trust. Having regard to ray finding that the accused was under no obligation to render account to the Company, these rulings are distinguishable. Besides, now the amendment made by section 181 (4) of the new Code enacts that the Courts within those local jurisdiction the property, which is the subject-matter of the offence of criminal breach of trust, was required to be accounted for, will have jurisdiction to try. That being so, the question, whether a correct law was laid down in them, need not be gone into. For the foregoing reasons S. Arunachala Goundan Vs. K.S. Akhileshwara Ayyar, and Mohru Lal Vs. Emperor, are no longer in point.

In the result, we are of the considered view that the Ludhiana Court has no jurisdiction to take cognizance of the offences mentioned in the complaint. The petition is accordingly accepted and we direct that as required by section 201 (1) of the old Code, the complaint be returned to the complainant for presentation to the proper Court, with an endorsement to that effect.

S.S. Sandhawalia, J.

I agree.