K.F. Mathai vs State of Kerala

A. Hariprasad, J.—Appellant is the 1st accused in C.C. No. 5 of 1998 on the file of the Enquiry Commissioner and Special Judge, Thrissur. The appellant was charged with offences punishable under Section 5(1)(c) and (d) read with Section 5(2) of the Prevention of Corruption Act, 1947 (in short, "the Act of 1947") and Sections 409, 465, 471, 477A and 420 read with Section 34 of the Indian Penal Code (in short, "IPC"). After trial, the court below convicted the appellant for offences punishable under Sec. 5(1)(c) and (d) read with Sec. 5(2) of the Act of 1947 and with the aid of Sec. 13(1)(c) and (d) read with Secs. 13(2) and 30 of the Prevention of Corruption Act. 1988 (in short, "the Act of 1988"). Court below held that in view of the sentence under Sec. 5(1)(c) of the Act of 1947, no separate sentence need be awarded under Sec. 5(1)(d) of the said Act. Still further, the court below convicted the appellant under Secs. 409, 420 and 477A IPC. Appropriate sentences too were imposed on the appellant and it was directed that substantive sentences of imprisonment should run concurrently.

Heard Shri R. Anil, learned counsel for the appellant and Shri N. Suresh, learned Public Prosecutor.

Facts, in brief, are as follows: Appellant was the Shop Manager of Maveli Store, Erumeli from 19.12.1985 to 08.08.1988. Along with the appellant, three other accused were also tried. 4th accused expired before the trial commenced. Accused 2, 3 and 5, who stood the trial, have been acquitted. Accused 2 and 3 were helpers working in the Maveli Store, Erumeli. Deceased 4th accused was the Unit Manager of Ponkunnam Taluk Depot of the Kerala State Civil Supplies Corporation (in short, "the Corporation") at the material time. 5th accused was the Taluk Supply Officer. It is alleged that in furtherance of common intention, the appellant along with other accused committed criminal breach of trust and misappropriated a sum of Rs. 1,84,446.77 belonging to the Corporation as value of commodities entrusted with the appellant and other accused persons. Further, Rs. 500/- being the imprest (petty cash) entrusted with the appellant was also misappropriated. Appellant and other accused persons thereby received undue pecuniary advantage of the said sum and, therefore, they committed the offences mentioned above.

Learned trial Judge examined 16 witnesses on the side of the prosecution. There was no defence evidence. Exts.P1 to P27 are the documents produced on the side of the prosecution. Shri R. Anil, learned counsel for the appellant submitted that the court below committed a grave legal error in convicting the appellant. According to him, the evidence in this case do not justify a conviction. Before dealing with the actual issues involved in the case, we shall just look into the evidence adduced by the prosecution against the appellant.

PW1 was the Shop Manager in Maveli Store, Erumeli from 08.08.1988 till 31.08.1988. Appellant was his predecessor. Ext.P1 is the transfer of charge from the appellant to PW1. PW1 testified that it was prepared and signed by the appellant along with accused 2 and 3. PW1 has also signed on Ext.P1. The appellant has a case that even before PW1 taking charge, the appellant was put under suspension. This is a fact admitted by PW1 in cross-examination. But documents show otherwise. He was suspended from service only after relinquishing the charge. However, the appellant would contend that he was not allowed to come to the premises as he was a suspended employee and he did not sign on Ext.P1, transfer of charge report. Nonetheless, the court below did not accept this contention of the appellant.

PW2 was the Managing Director of the Corporation and he issued Ext.P2 sanction to prosecute accused 2 and 3. PW4 was the authority, who issued Ext.P4 sanction to prosecute the appellant. There is no dispute regarding validity of the sanction to prosecute the accused persons. PW3 is the internal auditor, who was functioning in the head office of the Corporation during the relevant period. He conducted an audit in Maveli Store, Erumeli for a period from 01.04.1988 to 06.08.1988. Ext.P3 (a) is the audit report. There are indications that stock in the Maveli Store was deficit during that period.

PW5 proved Ext.P5 extract of cash receipt register kept in the State Bank of Travancore, Ponkunnam Branch and Ext.P5(a), relevant pages of the said register. PW6 was the Company Secretary. He wrote a letter to the Vigilance and Anti Corruption Bureau (in short, "VACB") requiring a vigilance enquiry in the matter. Ext.P3(b) is the letter issued by PW6.

PW7 was the Assistant Manager of the Corporation, Kottayam. He conducted an inspection on 26.07.1988 in the Maveli Store in question and submitted Ext.P8(a) report. PW8 was the Junior Manager of the Purchasing Section at the head office of the Corporation. Ext.P7(f) is the price bulletin in respect of various commodities.

PW9 is the Deputy Superintendent of Police, VACB, Kottayam Unit, who submitted Exts.P9 and P10 reports incorporating the provisions under the Act of 1988. It is to be remembered in this context that originally the case was registered by local Police and thereafter, on the request of the higher officers of the Corporation, VACB registered the case and the matter was transferred for investigation to the Dy.S.P. PW10 was the Senior Grade Assistant of the Corporation. Ext.P11 stock register was marked through him. Ext.P12 is the consignment note. PW11 was the Assistant Sub Inspector of Erumeli Police Station, who initially registered the crime, which was later taken over by the VACB. PW12 was the Circle Inspector of Police, Manimala, who conducted preliminary investigation in Crime No. 44 of 1990 registered by the local Police. PWs 13, 14 and 16 are the Police Officers, who conducted investigation on various occasions and recovered documents in this case. PW15 was the Senior Assistant of the Corporation, who proved Ext.P27 imprest pass book. The said book revealed that on 01.07.1988, there was a balance of Rs. 500/-. Thereafter, the transaction happened only on 19.09.1988.

Learned counsel for the appellant submitted that the court below, on a detailed consideration of the evidence, acquitted accused 2 and 3 for one set of reasons and the 5th accused, for another set of reasons. Same set of reasons are applicable to the appellant as well.

It will be apposite to consider the penal provisions involved in this case. Sec. 5(1)(c) and (d) of the Act of 1947 reads as follows:

"5. Criminal misconduct in discharge of official duty:-

A public servant is said to commit the offences of criminal misconduct

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(c) If he dishonestly or fraudulently misappropriates or otherwise converts for his own use any property entrusted to him or under his control as a public servant or allows any other person so to do; or

(d) If he, by corrupt or illegal means or by otherwise abusing his position as a public servant, obtains for himself or for any other person any valuable thing or pecuniary advantage;

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Sub-sec.(2) of the above Section is also relevant, which is extracted hereunder:

"Any public servant who commits criminal misconduct shall be punishable with imprisonment for a term which shall not be less than one year but which may extend to seven years and shall also be liable to fine:

Provided that the court may for any special reasons recorded in writing, impose a sentence of imprisonment of less than one year."

Learned counsel for the appellant would contend that to attract an offence under Sec. 5(1)(c) of the Act of 1947, the prosecution must establish that the accused dishonestly or fraudulently misappropriated or otherwise converted for his own use any property entrusted to him or under his control as a public servant or allowed any other person so to do. It is further contended that the evidence in this case will not show that the accused had committed any of the acts mentioned in the provision. Further submission is that the penal provision under Sec. 5(1)(d) of the Act of 1947 is not attracted in this case going by the allegations raised against the appellant.

The other penal provisions for which the appellant is convicted are under Secs. 409, 420 and 477A IPC. Sec. 405 IPC defines criminal breach of trust. On a reading of the provision, it can be seen that a person entrusted with property or having any dominion over the property, if 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. Sec. 409 IPC provides the punishment for criminal breach of trust by public servant, or by banker, merchant or agent. This is an aggravated form of criminal breach of trust. If the person entrusted with property or having any dominion over property is holding it in his capacity as a public servant or in the way of his business as a banker, merchant, factor, broker, attorney or agent commits criminal breach of trust in respect of that property, shall be punished with imprisonment for life.

Sec. 477A IPC deals with falsification of accounts. The said Section reads as follows:

"Falsification of accounts.-Whoever, being a clerk, officer or servant, or employed or acting in the capacity of a clerk, officer or servant, wilfully, and with intent to defraud, destroys, alters, mutilates or falsifies any book, electronic record, paper, writing, valuable security or account which belongs to or is in the possession of his employer, or has been received by him for or on behalf of his employer, or wilfully, and with intent to defraud, makes or abets the making of any false entry in, or omits or alters or abets the omission or alteration of any material particular from or in, any such book, electronic record, paper, writing, valuable security or account, shall be punished with imprisonment of either description for a term which may extend to seven years, or with fine, or with both.

Explanation.- It shall be sufficient in any charge under this section to allege a general intent to defraud without naming any particular person intended to be defrauded or specifying any particular sum of money intended to be the subject of the fraud, or any particular day on which the offence was committed."

Another penal provision to which the appellant is called up to answer is Sec. 420 IPC. Sec. 415 defines ''cheating''. The ingredients for cheating are that a person must deceive any person by fraudulently or dishonestly inducing the second person to deliver any property to any person or to consent that any person shall retain any property or intentionally induces the person so deceived to do or omit to do anything which he would not do or omit if he were not so deceived. Apart from that, the act or omission caused or should be likely to cause damage or harm to that person in body, mind, reputation or property. Sec. 420 IPC deals with cheating and dishonestly inducing delivery of property. This also is an aggravated form of cheating provided with a punishment of imprisonment, which may extend to seven years.

We shall start with the evidence let in the case. PW1 was the successor to the appellant, who functioned as the Shop Manager, Maveli Store, Erumeli from 08.08.1988 to 31.08.1988. According to him, he took charge on 08.08.1988. Ext.P1 is the transfer of charge report. Appellant and accused 2 and 3 signed on Ext.P1. According to PW1, Ext.P1 was written up in the handwriting of the appellant. He saw all the persons signing on Ext.P1. In cross-examination, PW1 admitted that the appellant was in suspension during that time. It is his answer that he did not instruct the appellant to come and sign on Ext.P1.

PW2 was the Managing Director of the Corporation. He issued sanction for prosecuting accused 2 and 3. There is no challenge against the order of sanction issued by PW2. Not only that they have been acquitted by the trial court.

PW3 was the Internal Audit Officer of the Corporation functioned at the Head Office, Ernakulam. He examined the accounts of Maveli Store, Erumeli relating to a period from 01.04.1988 to 06.08.1988. The file containing the audit report is Ext.P3. From pages 51 to 76 of Ext.P3, we will find the audit report. PW3 proved his signature thereon. Those pages are marked as Ext.P3(a). According to PW3, he has clearly stated about the irregularities in Ext.P3(a). This witness was subjected to cross-examination. Ext.P3(a) would show that on 20.07.1988, the appellant and helpers in the Maveli Store, were transferred to various other places on account of allegations of black marketing. Later, the appellant was put under suspension as per proceedings dated 10.08.1988. It is, therefore, evident from Ext.P3(a) that the appellant was not under suspension on the date of Ext.P1 charge handing over report. It can be seen from Ext.P3(a) that out of the sales turnover of Rs. 11,49,258.68, only a sum of Rs. 11,07,995.05 was remitted by the appellant to the Corporation, leaving a balance of Rs. 41,263,63 unremitted. Details of remittance can also be seen from Ext.P3(a). Regarding the non-accounting of imprest in Ext.P3(a), it is mentioned that on verification of the imprest pass book of the Maveli Store, Rs. 500/- was seen outstanding as advance. It is further mentioned in Ext.P3(a) that working expenses were met by diversion from sales proceeds (vouchers for Rs. 987.50 have been adjusted against the sales proceeds) and the advance should have been handed over by the appellant to his successor, but that was not done.

In another heading, shortage of stock was described in Ext.P3 (a). The stock was physically verified by the appellant and Shri P.K. Divakaran on 08.08.1988 in the presence of the Unit Manager. Ext.P3 (a) shows a tabular column regarding the shortage of stock occurred during the period from 01.04.1988 to 06.08.1988. The percentage of shortage in respect of each item has been shown therein. It is also clearly mentioned in Ext.P3(a) that this shortage was abnormal and it could not be considered that it occurred due to handling. According to Ext.P3(a), total loss under the above said items and the sale of containers (like gunny bags, etc.) comes to Rs. 2,10,568.58. It is also seen from the report that there had been undue delay in remitting amounts to the Corporation, thereby indicating misappropriation by the appellant.

When PW3 was cross-examined, questions were put regarding Ext.P3(a). PW3 emphatically said that the stock deficit was ascertained after verifying the records kept in the Ponkunnam Depot, wherefrom the stocks were supplied. He categorically stated that on verification of the registers kept at that place, it was revealed as to how the deficit happened. PW3 further stated that he had occasion to see either non-accounting or deficit accounting in the stocks supplied from Ponkunnam Depot. In spite of cross-examination, the evidence tendered by PW3 remains credible and it gets ample support from Ext.P3(a).

PW4 was the Director, Civil Supplies Department. Ext.P4 is the sanction order for prosecuting the appellant. Appellant was working under the Civil Supplies Department at the material time and the Director was the competent authority to remove the appellant from service. There is no challenge against the order of sanction.

PW5 was the Manager, State Bank of Travancore, Ponkunnam Branch. The cash receipt register pertaining to the Maveli Store, Erumeli is Ext.P5. PW5 deposed that entries in page Nos. 165 to 254 show the receipts in Maveli Store, Erumeli from 06.04.1988 to 06.08.1988. The entire pages were marked as Ext.P5(a). There was no effective cross-examination on this witness.

PW6 was the Company Secretary of the Corporation. He took disciplinary action in these matters. As per the instruction of the Managing Director of the Corporation, PW6 conducted investigation. Thereafter, he sent a letter to the Director of Vigilance recommending a vigilance enquiry. The draft letter is Ext.P3(b). He has produced some circulars, which are marked as Ext.P7 series. Ext.P7(c) shows the duties and responsibilities of the Junior Manager (Marketing). Ext.P7(d) shows the duties and responsibilities of helpers in the Maveli Store. Duties and responsibilities of the Shop Manager read as follows:

"1) Maintenance of stock accounts, assets register and consignment register.

2) Issue bills for all sales.

3) Remittance of sales proceeds of every day on the next day.

4) Keep proper account for imprest expenses.

5) Send daily sales return and other periodicals."

Duties and responsibilities of helpers under the Helpers Service Rules, 1978 read as follows:

"1) Open and close the outlets or office.

2) Arrange and display the articles.

3) Clean and sweep the premises.

4) Store empty barrels, gunny boxes, etc. until they are removed.

5) Display samples in small glass bottles.

6) Store damage items away from the good items.

7) Attend Consumer and issue goods as per bills.

8) Issue the articles in bags or rappers.

9) Attend any other items of work entrusted to him by the Shop Manager or the Superior Officers connected with the functioning of the outlet."

PW7 was the Assistant Manager, Kottayam of the Corporation. He visited the Maveli Store, Erumeli on 26.07.1988 as instructed by the Regional Manager. Ext.P8 is the file prepared by him. When he was cross-examined, he stated that mainly he investigated the allegation regarding black marketing.

PW8 was the Junior Manager, Purchase Section, Head Office of the Corporation. He produced the monthly price bulletin showing the selling prices of pulses and spices. PW9 filed a report showing the correct name of the 5th accused. There was no cross-examination on the above said witnesses.

PW10 worked as Senior Grade Assistant, Kottayam Regional Office of the Corporation. He feigned ignorance in respect of many matters. He deposed that he was to retire within a short time before deposing in the court. He proved the modalities of taking stocks in Maveli Stores and sale of articles. He deposed that the containers in which stocks were received like gunny bags, etc. will have to be sold. According to him when goods were transferred from one Maveli Store to another, the details should be entered in Ext.P1 register. His non-committal attitude will not render help to the case of the appellant.

Testimony of PW11 is not very important because he is an Officer in the local Police, who registered the crime initially. Similarly, PW12 also conducted initial part of the investigation. He recovered documents in this case from the possession of various officers. PWs 13 and 14 are Police Officers, who took part in the investigation. PW15 was the Senior Assistant in the Corporation. He was the Shop Manager, Maveli Store, Erumeli for some time. He produced Ext.P27 imprest pass book. Rs. 500/- was the cash balance in Ext.P27 as on 01.07.1988. After 01.07.1988, only on 19.09.1988 a transaction was happened as per Ext.P27. There was no cross-examination on this witness by the appellant.

Learned counsel for the appellant contended that the court below failed to consider the fact that none of the prosecution witnesses has established that the appellant was responsible for the deficiency in stock and cash. Main contentions raised by the learned counsel are that remittance made to the bank as per Ext.P5 was not established by producing the bank statement, that the deposition of PW5, the bank manager, does not show the short fall in remittance to the bank, that entrustment of goods to the appellant was not conclusively established, that deficit in stock ipso facto will not make out misappropriation because of the duties assigned to him and that since accused 2 and 3 are acquitted, there is no logic in convicting the appellant on the same set of allegations.

Learned Public Prosecutor opposed all these contentions with definite answers. PW5 proved Ext.P5. He proved Ext.P5(a) entries contained in page Nos. 165 to 254. The entries would show the remittance from Maveli Store, Erumeli on various dates. This has been audited by PW3. The inaccuracies in the entires have been considered in Ext.P3(a). It is submitted by the learned Prosecutor that regarding entrustment of goods, it has been spoken to by PW3 with reference to the documents and those aspects are reflected in Ext.P3(a). Defence contention that deficit in stock will not ipso facto make out a case of misappropriation is also denied by the Prosecutor, contending that the duties and responsibilities attached to the post of Store Manager would show that it was primarily his responsibility to verify the stock periodically and see that it tallied with the stock supplied for sales. Learned Prosecutor further contended that acquittal of accused 2 and 3 will not enure to the benefit of the appellant, since he was responsible for the conduct of Maveli Store, Erumeli in all respects. In fact, accused 2 and 3 were not directly responsible for taking delivery of stocks, monitoring the sales proceeds and tallying the accounts.

As mentioned above, the duties and functions of the appellant and that of the helpers have been specifically defined. Learned counsel for the appellant contended that the appellant was asked to perform multifarious tasks as Manager of the Maveli Store. He has to take delivery of stocks, he has to monitor sales happening in the shop, he has to remit the cash in bank and he has to control the entire affairs in the shop. Therefore, he could not be present all the time in the store, as he had to do functions outside the premises of the store. It is true that he was supposed to discharge various functions, but that will not absolve him of the responsibility of properly accounting the sales proceeds and the stock.

Another complaint raised by the appellant is that the court below relied on materials not borne out by the records for convicting him. It is also contended that the court below has formulated a chart to find that there was deficit accounting during the relevant period. I have carefully gone through the material records and the impugned judgment. The chart was prepared by the learned trial Judge based on Ext.P3(a) and other relevant records. I find no legal infirmity in the deductions made by the court below regarding the short fall in accounting cash and stock.

The learned trial Judge on the basis of the materials reasoned that in the matter of functioning of Maveli Store, the appellant, the Shop Manager, stands in a different footing. Reckoning the nature of duties and responsibilities of a Shop Manager, the court below found that if at all there was any deficiency in accounting, the Shop Manager is responsible to explain properly the mode or the manner in which he had dealt with the commodities. There is no illegality or impropriety in this reasoning.

The court below considered the evidence of PW5 and Ext.P27 to find that the imprest entrusted to the appellant was not properly accounted. As on 01.07.1988, there was a balance amount of Rs. 500/- in the imprest account (Ext.P27). Thereafter, only on 19.09.1988 a further transaction happened. Appellant has signed on Ext.P27 on 01.07.1988 showing receipt of Rs. 500/-. There is no case for the appellant that on 08.08.1988, he handed over Rs. 500/- when he handed over charge to PW1. Learned counsel for the appellant contended that if at all there is any non-accounting of Rs. 500/-, it is only a trivial amount. That contention cannot be accepted because as a responsible officer, the appellant was bound to account for the cash belonging to the Corporation.

Learned trial Judge, in paragraph 54 of the impugned judgment, considered the details of stock regarding various commodities dealt with in the store. It was found that there were unauthenticated entries in Ext.P11 stock register. Learned counsel for the appellant has a contention that entries in Ext.P11 were not properly proved. It is true that the witness through whom Ext.P11 was proved did not give details about the entries, but the entires were audited and the correctness of the same is reflected in Ext.P3(a), which was properly proved. After considering the entire evidence, the learned trial Judge formulated charge showing the deficiency in the cost of articles. It was found that the worth of stock dealt with at the Maveli Store between 01.04.1988 and 06.08.1988 was Rs. 14,10,035.62. The remittance to the bank was Rs. 11,26,630.75. The amount of credit sale was Rs. 82,950.60. The cash in hand was Rs. 15,570/-and vouchers worth was Rs. 987.50. Therefore, the court below found that the appellant failed to keep proper accounts and this irregularity caused financial loss to the Corporation.

Learned counsel for the appellant submitted that there is no allegation that the appellant misappropriated or converted money belonging to the Corporation for his benefit. This contention is also stoutly denied by the prosecution. The offences under Sec. 5(1)(c) and (d) of the Act of 1947 (Sec. 13(1)(c) and (d) of the Act of 1988) are specifically alleged against the appellant. Testimony of material witness points at the misconduct alleged. The contention that details of charge were not furnished was also repelled by the court below relying on Sec. 6A of the Act of 1947 and Sec. 23 of the Act of 1988 by holding that particular items or exact dates need not be specified. There is no legal infirmity in the charge. Therefore, the court below rightly convicted the appellant under various counts. But, there is one mistake committed by the trial court. The trial court found that the appellant was guilty under Sec. 5(1)(c)(d) of the Act of 1947. But, no sentence was imposed for the offence under Sec. 5(1)(d) of the Act of 1947. This is clearly illegal. Every conviction should be followed by a sentence is the inviolable rule. This Court, invoking its revisional powers, can correct the mistake, of course without prejudicially affecting the rights of the appellant by enhancing the sentence. On going through the entire evidence and on reconsideration of the matter, I find no legal reason to interfere with the conviction of the appellant. Therefore, I confirm the conviction of the appellant under all counts.

Learned counsel for the appellant submitted that the ordeal started in the year 1988 and, therefore, leniency may be shown in the matter of sentence. It has to be borne-in-mind that the menace of corruption has affected the health of the society to a great extent. It cannot be viewed simply as a monitory corruption, but an onslaught on the rights and interests of the society.

Considering the entire facts and circumstances, the appeal is disposed as follows:

"(i) Convictions of the appellant entered by the trial court under the said provisions of law are confirmed.

(ii) The appellant shall undergo rigorous imprisonment for a period of two years and pay a fine of Rs. 1,00,000/- (Rupees One lakh only) and in default, to undergo simple imprisonment for a period of six months under Sec. 5(1)(c) read with Sec. 5(2) of the Act of 1947 with the aid of Sec. 13(1)(c) read with Sec. 13(2) and 30 of the Act of 1988.

(iii) The appellant shall undergo rigorous imprisonment for a period of one year and pay a fine of Rs. 1,00,000/- (Rupees One lakh only) and in default, to undergo simple imprisonment for a period of six months under Sec. 5(1)(d) read with Sec. 5(2) of the Act of 1947 with the aid of Sec. 13(1)(d) read with Sec. 13(2) of the Act of 1988.

(iv) The appellant shall undergo rigorous imprisonment for a period of two years under Section 409 IPC.

(v) The appellant shall undergo rigorous imprisonment for a period of two years under Section 420 IPC.

(vi) The appellant shall further undergo rigorous imprisonment for a period of two years under Section 477A IPC.

(vii) All the substantive sentences of imprisonment shall run concurrently.

(viii) The period of detention undergone by the appellant in connection with the case shall be set off under Sec. 428 of the Code of Criminal Procedure.

All pending interlocutory applications will stand dismissed.