Prem Nath vs State of Punjab

R.L. Anand, J.

S/Shri Prem Nath, Pawan Kumar and Kewal Krishan have filed the present petition under Section 482 Cr.P.C. for quashment of case FIR No. 140 dated 27.8.1996 under Sections 409/34 IPC Police Station Dharamkot, District Ferozepur.

The case was registered on the basis of a letter written by District Manager, Punsup Ltd., Ferozepur and it can be quoted as follows :

"Sir, It is submitted as under : (1) That the Punsup Ltd. is a company owned by Punjab Government, and the undersigned is District Manager, Punsup, Ferozepur. The Punsup Ltd. has been set up for purchase, supply and distribution of essential commodities and to undertake and promote trade to maintain the prices in the market. The Punsup acts as agent of Punjab Government, Central Government and F.C.I., in the matter of procurement and distribution of foodgrains including rice. (2) That for the purchase and procurement of rice for Central pool, Punsup is purchaser of procurement paddy from the market and it shelled from various rice mills and the rice millers supply rice to the F.C.I. on behalf of Punsup. Thus rice millers act as agent of Punsup between Punsup and F.C.I. The paddy purchased and rice obtained after shelling belongs to the Central Government. Neither Punsup nor Rice Millers can sell paddy rice without the permission of the Central Government and the custody of the rice of paddy and rice in transit. (3) That in the year 199495 M/s Baba Gendhi Ram Rice Mills, Dharamkot, Tehsil Zira, District Ferozepur agreed to shell paddy of Punsup and to deliver the rice after shelling to the F.C.I. An agreement to this effect was written between the District Manager, Punsup Ltd., Ferozepur and M/s Gendhi Ram Rice Mills, Dharamkot, Distt. Ferozepur through its partner Kewal Krishan containing the details of terms and conditions. The photocopy of the same is attached. (4) That on 20.10.1994 M/s Baba Gendhi Ram Rice Mills, Dharamkot was entrusted 45,000 bags weighing 29250 qtls. of PR106 paddy. The total quantity of paddy entrusted to M/s Baba Gendhi Ram Rice Mills, Dharamkot comes to 45,000 bags weighing 29250 qtls. and Shri Pawan Kumar partner M/s Baba Gendhi Ram Rice Mills Dharamkot received this paddy and issued the receipt dated 20.10.1994 in this regard in favour of the Punsup. That as per agreement 2% driage is permissible. After giving the benefit of 2% driage, net paddy which was in the entrustment of M/s Baba Gendhi Ram Rice Mills, Dharamkot comes to 28665 qtls. of PR106 paddy. Thus the total entrustment was 28665 qtls. of paddy. The yield of PR106 is 67%. As per conversion factor M/s Baba Gendhi Ram Rice Mills, Dharamkot was to deliver 19205.55 qtls. of rice to F.C.I. till 28.2.1995 on behalf of the Punsup of specifications as laid down in Punjab Rice Procurement Control JUDGMENT 1978 as amended from time to time and other orders, notification issued by the Punjab Government. (6) That M/s Baba Gendhi Ram Rice Mills, Dharamkot has not delivered any rice to the F.C.I. so far. (7) That M/s Baba Gendhi Ram Rice Mills was required to deliver to F.C.I. on behalf of Punsup of rice upto 28.2.1995. Whereas the firm has not supplied so far any rice. This period was extended upto 20.6.1996 by the Punjab Government. The Central Government has allowed the Rice Mills to pay the price of paddy lying with them @ 443/ per qtl. of PR106 quality paddy and Rs. 422/ for fine quality paddy, if they have not delivered the rice to the F.C.I. (8) That thereafter 18075 bags weighing 1174785 qtls. of paddy was sold to M/s Baba Gendhi Ram Rice Mills and some other Rice Millers against various release orders copy enclosed. (9) That the remaining paddy which is required to be lying in the premises of M/s Gendhi Ram Rice Mills in their custody comes to 26925 bags weighing 1750215000 qtls. Physical verification of stock was conducted on 10.6.1996 by Sh. S.P. Rishi, Field Officer, Punsup, Phillaur. It was found that 6916 bags weighing 449663000 qtls. were lying there. Thus there was shortage of 20009 bags weighing 13005562000 qtls. M/s Baba Gendhi Ram Rice Mills have removed from the premises without the consent of Punsup and they have dishonestly misappropriated the same, the value of which is Rs. 515763872. Out of this amount M/s Baba Gendhi Ram Rice Mills have deposited the amount of Rs. 12,00,000/ on 21.6.1996, the price of 4750 bags weighing 302595000 qtls. Thus M/s Baba Gendhi Ram Rice Mills have dishonestly misappropriated 15259 bags weighing 997967000 qtls. Paddy, value of which is Rs. 39,57,63872. Partners of M/s Baba Gendhi Ram Rice Mills have been asked many times to account for the shortage of the paddy but they have failed to give any explanation regarding this shortage of paddy. (10) That thus in the above mentioned circumstances the partners of M/s Baba Gendhi Ram Rice Mills, Dharmakot have dishonestly misappropriated 15259 bags weighing 997967000 qtls. of paddy value of which is Rs. 39,57,63872 and have deprived the Punsup of this amount and have committed the breach of trust being the against of Punsup and as such are liable under Sections 409/34 IPC. It is, therefore, requested that proper action against the partners of M/s Baba Gendhi Ram Rice Mills, Dharamkot may kindly be taken by registration of the case and investigating the same and the culprits be brought to look and punished."

The principal argument raised by learned counsel for the petitioner is that offence punishable under Section 409 IPC prima facie is not made out and that the liability, if any, arises from a contract and is contractual liability and no criminal proceeding can go on and thirdly the offence under Section 420 IPC is prima facie not made out and the last point raised by the petitioner is that petitioner Nos. 2 and 3 had nothing to do with the firm M/s Baba Gendhi Ram Rice Mills, Dharamkot, district Ferozepur. This case of the petitioner has been refuted by the respondents and according to respondent Nos. 2 and 3,45,000 bags of paddy were entrusted to M/s Baba Gendhi Ram Rice Mills, Dharamkot through Punsup, which is the agent of respondent No. 2. The case of the respondent Nos. 2 and 3 further is that after shelling the paddy the firm M/s Baba Gendhi Ram Rice Mills and its partners were supposed to return the rice but they have not done so. According to the allegations the paddy worth Rs. 51 lacs was allegedly misappropriated by the firm and its partners out of which a sum of Rs. 31 lacs approximately was deposited and still the said firm and its partners misappropriated the paddy to the extent of Rs. 20,33,800.52 as is evident from the letter dated 11.10.1996 Annexure P5.

While deciding the petition under Section 482 Cr.P.C., this Court has to see the prima facie allegations in order to find out whether any offence has been made out or not. As contended by the learned counsel for the petitioner, who relied upon the letter dated 16.9.1996 Annexure P4 and submitted that as per this letter a joint verification was done and the goods to the extent of Rs. 31,23,838.20 were found short and the said amount has already been paid in that letter. This submission of the learned counsel for the petitioner is totally devoid of merit in view of the letter dated 11.10.1996 which has been written by the District Manager, Punsup, Ferozepur itself clearly indicating that after adjustment a sum of more than Rs. 20 lacs is outstanding against the petitioner. The goods were entrusted to the petitioner No. 1 for a specific purpose that after milling they shall return the rice to the Punsup which is the recognised agent of respondent Nos. 2 and 3. The firm thought it proper to misutilise the said paddy by conversion for its own benefit and prima facie committed an offence under Section 406 IPC. It is not necessary that every action of an offender must yield to be a civil liability. An action can give a civil as well as criminal liability and the petitioner cannot take the benefit of the plea that the matter is of civil nature and that there is an arbitration clause between the parties to the effect that in the event of any dispute the matter shall be referred to the arbitrator. The learned counsel for the petitioner has relied upon an authority Bal Kishan Das v. P.C. Nayar, AIR 1991 SC 1531. The reliance has been placed on para No. 4 of the said judgment and I would like to reproduce this para as under :

"After hearing the counsel for both the parties and perusing the documents, we are of the opinion that this matter is purely of a civil nature. As pointed out earlier there was an arbitration proceedings and further the matter is pending for more than 17 years. Having regard to all the circumstances, particularly that the matter is purely of a civil nature, we feel that it is a fit case in which the proceedings taken by the Chief Judicial Magistrate are to be quashed. Accordingly, the entire proceedings now pending on the file of the Chief Judicial Magistrate, Ganjan are quashed. The appeal is accordingly allowed."

In my opinion the ratio is not applicable to the facts of the case in hand. Moreover, in the cited case the arbitration proceedings were pending. In the present case there is no adjudication by the arbitration either in favour of the petitioner or in favour of the respondents. It is the allegation of the respondents that firm M/s Baba Gendhi Ram Rice Mills, Dharamkot was an agent of respondent No. 2 and in these circumstances a prima facie offence under Section 409 is made out. The last submission which was raised by the learned counsel for the petitioner is that Kewal Krishan respondent No. 2 has nothing to do with M/s Baba Gendhi Ram Rice Mills, Dharamkot which was a partnership firm of Prem Nath and one Faquir Chand. This submission being a disputed question of fact because the perusal of Annexure P1 shows that Shri Prem Nath had signed the partnershipdeed as Kartra of a joint Hindu family and it will be seen as to who are the members of the joint Hindu family. Kewal Krishan is the real brother of petitioner No. 1 and he is the signatory of the agreement. So far as Pawan Kumar is concerned, this Court is of the opinion that he is not prima facie involved in any criminal liability. The allegation is that he simply received the goods on behalf of the firm. In these circumstances the liability will be of the firm and its partners. The disputed questions of facts are not to be gone into as consistently held by the Hon''ble Supreme Court which has also held that these provisions should be invoked sparingly and in exceptional circumstances.

This petition is partly allowed. The proceedings visavis petitioner No. 2 Pawan Kumar stands quashed. The petition regarding petitioner Nos. 1 and 3, Prem Nath and Kewal Krishan is hereby dismissed.