M.C. Gangadharappa vs State

M.P. Chinnappa, J.—Heard the learned Counsels appearing for the respective parties.

Sri Ajit J. Gunjal, the learned Counsel for the petitioner has vehemently argued that the offence u/s 409 of the IPC is not attracted in this case on the ground that he is not a public servant as defined u/s 21 of the IPC and also u/s 162 of the Co-operative Societies Act. He further submitted that the material evidence was not considered by the Courts below. He further submitted that the petitioner had already paid the entire amount said to have been misappropriated by him to the Society and no loss is caused to the Society. Therefore, he is entitled to be acquitted. In the alternative, as the offence does not come u/s 409 at the maximum the offence may come u/s 406 of the IPC which is not punishable with life imprisonment. In any event, if the Court were to hold that the petitioner has committed the offence and as it comes u/s 406 of the IPC taking into consideration, the fact that the offence is said to have taken place in the year 1987-88, he may be released on Probation of Offenders Act as at this belated stage, sending the only bread earner of the family to jail would cause greater hardship to the family.

Repelling this argument, the learned Additional State Public Prosecutor submitted that the word ''officer'' as contemplated under the Maharashtra Co-operative Societies Act is not applicable to the Karnataka Co-operative Societies Act. Under the Maharashtra Co-operative Societies Act committee members and Chairman or President, etc., are the officers of the Society, but under the Karnataka Co-operative Societies Act the word ''officer'' is not defined. u/s 2(g) of the Act an employee is not an officer of the Society. Therefore, the decision in the case of State of Maharashtra Vs. Laljit Rajshi Shah and Others, is not applicable to the facts of this case. Section 127A of the Karnataka Co-operative Societies Act refers to Section 21(a) of the IPC. The petitioner admittedly was the Secretary was entrusted with the custody of the property and he had dominion over the same. Therefore, the offence as alleged has been established in this case and the petitioner being employee of the Co-operative Society is punishable u/s 409 of the IPC. The Probation of Offenders Act is not applicable and no material is left out without being considered by the Courts below. This petition is filed against concurrent findings of both the Courts and no ground is made out for this Court to interfere. Therefore, the petition is liable to be dismissed.

The brief facts of the case are that the petitioner was employed as Secretary of the Vyavasaya Seva Sahakara Sangha Niyamitha, Lingadahalli from 23-4-1983 to 29-2-1988. As far as this is concerned, there is absolutely no dispute. Even for that matter Ex. P. 4(a) the entry in the resolution book Ex. P. 4 at page 76 clearly discloses that the petitioner was appointed as Secretary. P.W. 2-Basavaraju was working as Senior Auditor of the Co-operative Societies and he conducted audits of the said Society for the year 1987-88. Ex. P. 5 is the credit bill No. 1168, dated 20-8-1987 under which 50 quintals and 60 Kgs. of rice was purchased the value of which is Rs. 9,740.50. However, it was not taken to the stock register and the value was not entered in the cash book. Ex. P. 6 is a similar credit bill No. 878, dated 5-1-1988 under which 40 quintals of rice was purchased on 5-1-1988 the value of which is Rs. 7,700/-. This also was not taken into account and thereby he has misappropriated the amount. The Senior Auditor has submitted his report as per Ex. P. 3 and the petitioner has sent a letter as per Ex. P. 9 admitting the audit report and also the amount involved in the case. P.W. 1-D. Sathyanarayana Rao was authorised by the Assistant Registrar of Co-operative Societies by his letter Ex. P. 2 to file a complaint against the petitioner and accordingly, P.W. 1 filed a report at the Lingadahalli Police Station which came to be registered in Crime No. 70 of 1990 by the P.S.I., C.W. 8. Therefore, from these documents, it is abundantly clear that the Courts have rightly held that the petitioner was working as Secretary and he had misappropriated the amount. When his statement was recorded u/s 313 of the Cr. P.C., he admitted that he was entrusted with the work of maintaining accounts; looking after the properties and attending to Bank transaction, of the Society etc. Therefore, it is not in dispute that he was the Secretary of the Society and he had misappropriated the amount.

For the first time before this Court the learned Counsel submitted that he is not a public servant as defined u/s 21 of the IPC. Therefore, he has not committed the offence punishable u/s 409.

The first question that arises for consideration is as to whether the petitioner is a public servant as defined u/s 21 of the Indian Penal Code and also Section 127A of the Karnataka Co-operative Societies Act.

The learned Counsel for the petitioner relied on the decision rendered by the Supreme Court in the case of State of Maharashtra, supra. In that case, the respondents were members of the Managing Committee and the Chairman of the Co-operative Society under the Maharashtra Co-operative Societies Act. They were prosecuted for the offence inter alia u/s 409 of the IPC and Section 5(1) and (2) of the Prevention of Corruption Act, 1947. After considering the scope and object of the Act, their Lordships have held that elected representatives and Chairman are not officers as defined under the Act. But in the case on hand, the petitioner is none other than the paid Secretary of the Society. Therefore, it is necessary to refer to Section 2(e-3) of the Karnataka Co-operative Societies Act wherein ''Employee'' is defined to mean a salaried employee of a Co-operative Society and includes an official of the State Government or any employee of any other institution or Co-operative Society who for the time being is working in a Co-operative Society.

The commentary on Section 21 by Ratanlal and Dhirajlal''s Law of Crimes, 23rd edition at page 67 makes it clear that the explanation so added substantially widened the scope of the definition of the term ''public servant'' for purposes of that section and Sections 162 to 165 and 165A by bringing in various categories of officers who were not comprehended in the definition of the said term in Section 21. Amongst the categories so included were the officers and servants of Co-operative Societies. Section 3 of the same Amendment Act of 1962 had also amended the Prevention of Corruption Act, 1947, by substituting Section 2 thereof with an amended provision under which the term ''public servant'' was to be given the same meaning as had been assigned to it under the Explanation to Section 161 of the Indian Penal Code, brought in by the same Amendment Act. Thus, the members of the executive committee and other officers and servants of Co-operative Societies were rendered liable to be proceeded against u/s 5 of the Prevention of Corruption Act, 1947 also. Therefore, it is clear that the Secretary being a paid employee of the Society is a public servant as defined under the Act. This also is clear from the reading of Section 127A of the Karnataka Co-operative Societies Act, 1959, which reads:

"Every office-bearer of a Co-operative Society, every member of a committee and every employee of a Co-operative Society including sale and recovery officers shall be deemed to be public servants within the meaning of Section 21 of the EPC".

Therefore, the decision referred to above on facts is not applicable to this case as those persons were the elected representatives and the Chairman of the Society but in this case the petitioner is paid employee of the Society. Hence, the argument of the learned Counsel for the petitioner that the petitioner is not a public servant is liable to be rejected.

The learned Counsel for the petitioner further placed reliance on a judgment of the Supreme Court in the case of Janeshwar Das Aggarwal Vs. State of Uttar Pradesh, . In that case, physical charge of the articles not shown to have been made over to the Overseer after being regularly counted in the godowns. There was also no evidence to show misappropriation by the overseer. Goods being open and accessible to all and sundry, possibility of the goods having been pilfered or stolen by others existed. Therefore, their Lordships have held that both the ingredients not having been proved, the conviction cannot be sustained.

In the case on hand, there is absolutely no evidence to show that there is any possibility of pilfering or stealing of the property by others or handling of the money by any other person. On the other hand, he was in full charge and full control over the properties.

He also further placed reliance on a judgment of the Supreme Court in State Vs. Lakshmi Narain Singh and Another, . In that case a sum of Rs. 2,196/- which was meant to be disbursed to P.W. 2-Venugopal Naidu was withheld by the appellant and money was not paid to him on account of some mistake. In that connection Venugopal made a complaint on 1st June, 1971, the appellant disbursed the entire amount to Venugopal on account of withdrawal of Provident Fund. Therefore, their Lordships have held that it is merely a case of temporary retention of money for a short while and by mistake he had not paid the amount. Therefore, he was held not guilty. But in this case as explained above, on facts, also the decision is not applicable to the case on hand.

Further, it is not misappropriation of one transaction. On the other hand, he has committed breach of trust on two occasions. The auditor found that as per Ex. P. 5, the credit bill No. 1168, dated 20-8-1987, 50 quintals and 60 Kgs. of rice worth Rs. 9,740.50 was purchased and it had not been taken to the stock register and the value was not entered in the cash-book. Ex. P. 6 is a similar credit bill No. 878, dated 5-1-1988 under which 40 quintals of rice worth Rs. 7,700/- was purchased on 5-1-1988 and it was also not similarly taken into account. Besides that, P.W. 2-T.D. Basavaraju, Senior Auditor of Co-operative Societies also found certain other irregularities and misappropriation but only the above 2 items were charged against the accused person. So from this, it is clear that it is not by mistake that these irregularities had occurred. On the other hand, he had intentionally misappropriated the funds of the Society and also he has committed other irregularities.

The very purpose of this submission is to make out that the petitioner is not a public servant and therefore, offence does not come u/s 409 of the IPC. The learned Counsel for the petitioner however submitted that since the petitioner is not a public servant even if he has committed an offence it would come u/s 406 of the IPC. Therefore, Probation of Offenders Act can be invoked. In view of my finding that he is a public servant and the offence committed by him comes u/s 409 of the IPC his further argument on this point cannot be entertained.

It is also clear that Section 409 prescribes a maximum sentence of life imprisonment and the Probation of Offenders Act cannot be applied. The petitioner is also not entitled for the benefit of Probation of Offenders Act as it is not in dispute that he was aged more than 21 years at the time of commission of the offence. Hence, this argument also is rejected.

As far as the commission of the offence is concerned, both the Courts have come to the conclusion that there is sufficient material to show that the petitioner is guilty of the offence and they have held him guilty of the said offence. Therefore, that part of the evidence is upheld and the petitioner could not bring out any illegality or irregularity committed by both the Courts in appreciating the evidence let in by the prosecution calling for interference by this Court.

The learned Counsel for the petitioner however sought to argue that there is some discrepancy in regard to the withdrawal of the amount as per the evidence of the Chairman and the auditors that the amount was withdrawn by the Chairman, etc. The petitioner being the Secretary having domain over the property ought to have taken all the care to see the interest of the Society is protected which is meant for the benefit of the members of the Society. Even otherwise also it is not a serious lacuna in the case of the prosecution to hold that the petitioner is not guilty of the offence. After having gone through the evidence and the judgments passed by the Court below I am fully satisfied that the Courts have rightly held that he is guilty of the offence which also does not call for interference.

The learned Counsel however submitted that the offence was committed in the year 1987-88 and we are now in 2002, almost 15 years have elapsed and he is the only bread earner in the family and if he is sentenced to undergo imprisonment, it would cause irreparable hardship to the family members and farther, he has also repaid the amount

In the case of State of Karnataka Vs. Syed Mehaboob, it is held that the accused who was in charge of the Society as Secretary makes good the shortage detected during the audit, cannot be treated as his admission that he had misappropriated that amount. In that case also, it is clear that he was only in charge Secretary and immediately after it was detected, he paid the amount. But in this case it is not so, he was the full-fledged Secretary and he had paid the amount after a long time and only with a view to relieve from penal liability. But the fact remains that he had dishonest intention to misappropriate the amount to himself during the relevant time.

Now coming to the point of sentence imposed, the Court also has taken into consideration the circumstances under which the petitioner was placed and has imposed a sentence of one year, notwithstanding the fact that the maximum punishment prescribed u/s 409 of the IPC is life imprisonment. Therefore, I hold that insofar as the imposition of punishment is concerned, is not harsh. Therefore, he is not entitled for any lenient view.

It is common knowledge that the Co-operative Society is meant for the members and it is also a social piece of legislation. But unfortunately, the officers are involved in embezzlement and also misappropriation of funds as a result of which the very object of forming a Co-operative Society is defeated. The members who are beneficiaries are put into disastrous position. It is also not out of place to mention that the secretaries and office-bearers become enraged by their illegal acts. This case is one such example. He has misappropriated large sums of money and only because of audit report, the misappropriation was brought to light. Thereafter, he paid the amount and it is virtually admitting the guilt as stated above. Therefore, the argument of the learned Counsel for the petitioner that he is the only bread earner in the family and a lapse of 15 years would be a ground for lenient view, etc., is unsustainable.

In addition to that both the Courts have taken into consideration the sentence imposed on this petitioner which cannot be construed as on the higher side. Therefore, I have no hesitation to hold that this judgment does not call for interference. Hence, the petition is dismissed.

Before parting with this judgment, I may usefully quote the observations of their Lordship of the Supreme Court in State of Maharashtra''s case, supra, wherein their Lordships have held as follows:

"In view of the rival submissions at the Bar, the sole question that arises for consideration is, as to what is the effect of the provisions of Section 161 of the Maharashtra Co-operative Societies Act, in interpreting the provisions of Section 21 of the Indian Penal Code. It is undoubtedly true that the Co-operative Societies Act has been enacted by the State Legislature and their powers to make such legislation is derived from Entry 32 of List II of the Seventh Schedule to the Constitution. The legislature no doubt in Section 161 has referred to the provisions of Section 21 of the Indian Penal Code but such reference would not make the officers concerned "public servants" within the ambit of Section 21. The State Legislature had the powers to amend Section 21 of the Indian Penal Code, the same being referable to a legislation under Entry 1 of List in of the Seventh Schedule, subject to Article 254(2) of the Constitution, as otherwise, inclusion of the persons who are "public servants" u/s 161 of the Co-operative Societies Act would be repugnant to the definition of "public servant" u/s 21 of the Indian Penal Code. That not having been done, it is difficult to accept the contention of the learned Counsel appearing for the State that by virtue of deeming definition in Section 161 of the Co-operative Societies Act By reference to Section 21 of the Indian Penal Code, the persons concerned could be prosecuted for the offences under the Indian Penal Code. The Indian Penal Code and the Maharashtra Co-operative Societies Act are not statutes in pari materia. The Co-operative Societies Act is a completely self-contained statute with its own provisions and has created specific offences quite different from the offences in the Indian Penal Code. Both statutes have different objects and created offences with separate ingredients. They cannot thus be taken to be statutes in pari materia, so as to form one system. This being the position, even though the legislatures had incorporated the provisions of Section 21 of the Indian Penal Code into the Co-operative Societies Act, in order to define a "public servant" but those "public servants" cannot be prosecuted for having committed the offence under the Indian Penal Code. It is a well-known principle of construction that in interpreting a provision creating a legal fiction, the Court is to ascertain for what purpose the fiction is created, and after ascertaining this, the Court is to assume all those facts and consequences which are incidental or inevitable corollaries to giving effect to the fiction. But in so construing the fiction it is not to be extended beyond the purpose for which it is created, or beyond the language of the section by which it is created. A legal fiction in terms enacted for the purposes of one Act is normally restricted to that Act and cannot be extended to cover another Act".

Further, following the principles enunciated in Ramesh Balkrishna Kulkarni Vs. State of Maharashtra, their Lordships have held that a Municipal Councillor can be held to be a "public servant" within the meaning of Section 21 of the Indian Penal Code and the Municipal Councillor was acquitted. In the light of this decision, it is for the Government to take appropriate action to amend Section 21 of the Indian -Penal Code incorporating the person against whom the prosecution to be launched under the Indian Penal Code for the illegal act or violation of any of the provisions of law.

Send a copy of this judgment to the Law Department to take appropriate steps in the light of the observations made by the Supreme Court referred to above for amending Section 21 of the IPC by incorporating the person''s against whom prosecution to be launched under the Indian Penal Code.

With this observation, the petition is dismissed confirming the conviction and sentence imposed on the petitioner.