Mohamad Rafi and Another vs Emperor

Rowland, J.—The two petitioners were convicted u/s 420 read with Section 34, I.P.C. by a Magistrate of the First Class and the conviction has been affirmed by the Additional Sessions Judge. There were three charges, in each charge both the petitioners being named as accused. The outline of the case is that Nazirul Hassan, petitioner 2, accepted the post of organiser of a branch office at Keraiper Sarai, police station Hilsa, on behalf of what was styled the Unique Bank of Bengal," 11 Clive Row, Calcutta. The engagement dates from about the beginning of December 1930. Rafi, who is the husband of the sister of Nazirul Hasan and is a resident of the same village, was at the same time appointed as treasurer of this branch office. The general features of the loan scheme which Nazirul Hasan as organizer was to promote are described in the judgments of the Courts below and are similar to others of the link system or snow-ball scheme type which in a large number of cases has been found to be fraudulent, and in the present case both the Courts were satisfied that the scheme was a fraudulent one and not a genuine banking business. That conclusion has not been challenged here.

The petitioners come to this Court with two separate petitions, one apparently drafted by counsel and another by the petitioners themselves. In the former we are asked to interfere on 23 grounds and in the latter 71. But Mr. B.K. Sen appearing for the petitioners has with wise moderation restricted himself to one point of procedure and one point on the merits.

The point of procedure is that in the Magistrate''s Court the accused did not get the opportunity which they should have had of cross-examination of the Sub-Inspector of Islampur, P.W. 1, who was the first witness examined for the prosecution at the opening of the trialon 14th July 1932. It is said that the accused wished to prove certain statements made to him by prosecution witnesses which would discredit their testimony in Court. Cross-examination of this Sub-Inspector took place on 15th-16th December 1932 before the cross-examination of most of the prosecution witnesses; so the accused could not put questions to the Sub-Inspector regarding statements made to him.

Petitions were presented to the trying Magistrate on 21st January 1933 and 25th January 1933 to recall this Sub-Inspector after the cross-examination of other witnesses. In the petition of 21st January there is also a prayer for the recall of another Sub-Inspector who was in fact recalled and cross examined on the 25th. The Magistrate on the 25th noted in the order sheet that the petition was filed late and he did not find sufficient reason for summoning the Sub-Inspector of Islampur u/s 257, Criminal P.C. It was, as a matter of fact, the other Sub-Inspector who submitted the charge sheet and examined the prosecution witnesses and the Magistrate was probably right in considering that no serious importance attached to anything that could be elicited from the Sub-Inspector of Islampur in further cross-examination. Reference to the grounds of appeal in the Sessions Court shows that no reference was made there to any grievance in the matter of failure to resummon the Sub-Inspector of Islampur. For this reason I think that the point of procedure is not well founded and there is no defect in the proceedings in this matter.

The other point affects the merits and the substantial contention is that on the question of honesty or dishonesty of the accused, the learned Sessions Judge has fallen into the error of placing the burden of proof on the accused to prove their honesty; whereas it should have been placed on the prosecution to establish dishonesty. Undoubtedly the burden was on the prosecution to prove fraud or dishonesty, this being an element in the definition of cheating in Section 415-a person must be deceived and fraudulently and dishonestly induced, etc; and it is a general principle that every ingredient which is included in the definition of the offence must be established by the prosecution. The Sessions Judge has observed in the course of his judgment that:

to sustain the charge of cheating, it is not necessary that the accused should have themselves derived wrongful gain from the transactions; it is sufficient if the aggrieved persons are shown to have suffered wrongful loss as a result of the inducements offered by the accused.

This passage leaves it doubtful whether the learned Judge realized that the burden of proof was on the prosecution to prove against the accused the intention to cause wrongful loss. The judgment then goes on to discuss the matters to which the accused had invited reference as showing their own good faith; for instance the attempts of Nazirul Hasan to make inquiries through the postal and police authorities to get evidence about the directors and about the Unique Bank. These inquiries are discounted as having been made after the due date for the payment of loans and refunds; and the observation is made that:

the probability is that the accused were at pains to manufacture evidence of bona fides in view of the impending prosecution against them.

With reference to the argument that if there was fraud the accused themselves were victims, this is discounted by observing:

The accused persons never actually went to the length of instituting a case against the Directors of the Bank. Mere half-hearted and belated inquiries from the postal and police authorities are not sufficient to establish their good faith.

The learned Judge goes on to say that "there is no evidence of the accused having worked the loan scheme honestly." I think in face of these observations the contention on behalf of the petitioners is made out; that is to say, the burden is placed on the petitioners to prove their honesty rather than on the prosecution to prove their dishonesty. The Magistrate however has put the question correctly in his judgment where he observes:

It has to be seen whether the accused dishonestly induced people to deliver money to them and thereby cheated them, or they acted in good faith.

In this formulation of the question there is no misplacing of the burden of proof and the Magistrate says after dealing with some of the evidence that the evidence adduced by the prosecution shows that the inducements were simply dishonest, and fraudulent and illiterate, and simple villagers were cheated. But the evidence which the Magistrate had summarized just before making this observation was the evidence rather of the fraudulent nature of the scheme generally, and when the Magistrate continues and refers to Ex. 14 which is an account submitted by Nazirul Hasan in respect of Rs. 2,506 realised by him as admission fees and opening deposits, the Magistrate unfortunately falls into an error of record in saying that the entire amount was disbursed by him in his travelling allowance, establishment, etc. and uses this as proving his dishonest conduct on the ground that the accused had failed to prove that he was entitled to disburse the amount.

As a matter of fact, of this Rs. 2,506, Rs. 1,240 was refunded to depositors. The judgments of both the Courts being not altogether satisfactory, it is necessary to make some examination of the facts themselves. (After examining the evidence, his Lordship continued). It seems to me that it is far from improbable on the face of these papers that Nazirul Hasan was himself duped and was, as the defence contended, the victim of the fraud of the Directors of the Bank. As I have already pointed out, it is not for the accused to establish conclusively and beyond all possible doubt their own innocence; but it was for the prosecution to establish the guilt of the accused. In my opinion this is not clearly established and there is room for doubt as to the guilt of Nazirul Hasan.

His age is 29 and the age of the other accused is given as 15. He is given the dignified sounding office of treasurer, but must have held an entirely subordinate position and must have been acting under the directions of Nazirul Hasan. If guilty knowledge and intention is not established against Nazirul Hasan, still less is it established against this youngster.

I would therefore allow the application of both the petitioners and set aside the convictions and acquit them.

Saunders, J.

I agree.